Top ASX passive income shares to buy in May 2023

An older man wearing a helmet is set to ride his motorbike into the sunset, making the most of his retirement.An older man wearing a helmet is set to ride his motorbike into the sunset, making the most of his retirement.

Who doesn’t love the thought of passive income rolling on in every month? If you’ve been thinking about the possibility of earning more and working less, then read on! 

Because we asked our Foolish writers which ASX income shares they reckon could be worth taking for a spin right now.

Here is what the team came up with:

7 best ASX dividend shares for May 2023 (smallest to largest)

  • Metcash Limited (ASX: MTS), $3.77 billion
  • Viva Energy Group Ltd (ASX: VEA), $4.68 billion
  • ASX Ltd (ASX: ASX), $13.18 billion
  • South32 Ltd (ASX: S32), $18.98 billion
  • Coles Group Ltd (ASX: COL), $24.24 billion
  • Rio Tinto Ltd (ASX: RIO), $41.26 billion
  • Westpac Banking Corp (ASX: WBC) $79.13 billion

(Market capitalisations as of 3 May 2023).

Why our Foolish writers love these ASX passive-income stocks

Metcash Limited

What it does: Metcash supplies a wide number of independent retailers around the country, including IGA supermarkets, Cellarbrations, The Bottle-O, IGA Liquor, Porters Liquor, Thirsty Camel, Big Bargain Bottleshop, and Duncans. It also owns the hardware brands Mitre 10, Home Timber & Hardware, and Total Tools.

By Tristan Harrison: The Metcash share price has plunged around 19% over the past year, despite the company’s ongoing sales growth in FY23. I think this represents an attractive entry point for ASX income investors in May.

I believe the company’s food, liquor, and hardware divisions have the potential to be quite defensive, regardless of whatever happens next with the economy. Furthermore, Australia’s ongoing population growth should help fuel increased demand.

Commsec numbers put the Metcash share price at just 12 times FY23’s estimated earnings with a possible grossed-up dividend yield of 8.1%.

Motley Fool contributor Tristan Harrison does not own shares in Metcash Limited.

Viva Energy Group Ltd

What it does: Viva Energy supplies about a quarter of Australia’s fuel. The company supplies Shell fuels and lubricants through its national network of around 1,350 Shell and Liberty service stations.

By Bernd Struben: I like Viva Energy as both an ASX income share and one for potential capital appreciation.

Looking at the charts, the share price has marched steadily higher over the past three years. And the company has been expanding through a series of strategic acquisitions.

On 5 April, Viva announced it was acquiring OTR Group for $1.15 billion. The independent Australian convenience retailer generates some $3 billion of annual revenue with around 6,500 employees.

And on 1 May, the company reported it had completed its acquisition of the Coles Express Convenience Retailing business. This will help transform Viva’s retail business into a leading convenience and mobility business.

Viva Energy trades on a trailing yield of 8.8%, fully franked. Shares are up by around 15% since the opening bell on 3 January.

Motley Fool contributor Bernd Struben does not own shares in Viva Energy Group Ltd.


What it does: If you have participated in the Australian share market before, there’s a high probability you have interacted with a part of ASX Ltd’s business. The company is responsible for clearing and settling trades, conducting ASX listings, and providing market data.

By Mitchell Lawler: Australia’s largest securities exchange operator has fallen out of favour over the past year during reduced trading in financial markets. 

The subdued revenue growth and a non-cash, pre-tax impairment charge of $251.9 million – due to the CHESS replacement kerfuffle – brought statutory net profits after tax (NPAT) down 70.6% in the first half. 

In turn, ASX Ltd shares are now trading on what appears to be an extremely expensive 40 times earnings. However, I don’t believe the costly CHESS mistakes will be a recurring sight, which should help future earnings and bring that price-to-earnings (P/E) ratio back into reasonable bounds. 

At present, the company offers a trailing dividend yield of 3.5%. With a near-monopoly position and high barriers to entry, I’m personally confident ASX will prevail as a solid dividend payer well into the future.

Motley Fool contributor Mitchell Lawler does not own shares in ASX Ltd.

South32 Ltd

What it does: South32 is a globally diversified mining and metals company that was spun out of BHP Group Ltd (ASX: BHP) in 2015.

By James MickleboroI think South32 could be an ASX income share to buy in May if you’re not averse to investing in the mining sector.

I’m a big fan of the company due to the quality and diversity of its operations and its exposure to metals that will play a big role in the decarbonisation of the planet. These include aluminium, copper, and nickel.

Given the demand for these metals will likely remain strong over the next decade (or longer), I feel South32 is well-placed to generate bountiful free cash flow and pay big dividends.

In the near term, the team at Citi expect this to be the case. The broker is expecting fully-franked dividends per share of 21 cents in FY 2023 and 31 cents in FY 2024. This equates to yields of 5% and 7.4%, respectively. Citi also sees scope for its shares to rise from here with its buy rating and $4.90 price target.

Motley Fool contributor James Mickleboro does not own shares in South32 Ltd.

Coles Group Ltd

What it does: Coles operates Australia’s second-largest grocery store chain, with more than 800 stores around the country. It also owns Liquorland, First Choice Liquor Market, and Vintage Cellars.

By Brooke Cooper: With a 3.6% dividend yield, Coles might not be the first ASX share one considers when looking for passive income.

However, I think the current economic environment and the company’s history of dividend growth make it an attractive investment prospect.

Inflation is coming down, but it’s got a long way to go still, and we’re not out of the interest rate woods yet. But no matter how tight budgets get, most Australians won’t be able to shirk their weekly grocery shop.

Further, the company’s sales revenue jumped 6.5% last quarter to nearly $10 billion.

And Morgans agrees with me. It has an add rating and a $19.60 price target on Coles stock.

Motley Fool contributor Brooke Cooper does not own shares in Coles Group Ltd.

Rio Tinto Ltd

What it does: Rio Tinto is an Australian multinational company and one of the world’s largest mining corporations. It has four key operating segments: iron ore, aluminium, copper, and other minerals.

By Bronwyn Allen: Australia is a world leader in resources exploration and mining. Even when commodity prices are low, our big mining companies still make great money and typically pay above-average dividends.

For example, most investors would consider 4% a decent dividend yield. Rio Tinto has paid more than 4% every year for the past eight years. It’s also among the world’s top 20 dividend payers.

Looking ahead, broker Goldman Sachs is forecasting a fully-franked dividend of US$5.36 (AU$8.07) in FY23 (a 7.4% dividend yield) and US$4.68 (AU$7.05) in FY24 (6.5% yield).

Furthermore, I love any ASX share that combines strong dividends with good prospects for share price growth. Unlike the other big dividend payers of the ASX – the banks – I believe miners have far more scope for business growth and development. For example, production has just begun at Rio’s expanded Oyu Tolgoi copper mine in Mongolia.

Rio Tinto owns 66% of this mine, which is set to become the world’s fourth-largest copper project. This is important given demand for copper is expected to rise as the world decarbonises. In 2022, copper was the smallest contributor to Rio’s EBITDA among its four operating segments, so Oyu Tolgoi provides a significant strategic boost and diversification to earnings.

Goldman likes Rio’s projected production growth and improved free cash flow and says this ASX income share is great value at current share price levels. It has a buy rating on Rio Tinto and a 12-month share price target of $136.20.

Motley Fool contributor Bronwyn Allen does not own shares in Rio Tinto Ltd.

Westpac Banking Corp

What it does: Westpac is an ASX 200 share that hardly needs introducing. It is one of Australia’s oldest companies, and today occupies a spot in the exclusive club of the big four ASX banks.

By Sebastian Bowen: If you’re on the hunt for passive income this May, where better to start than the ASX banks?

The big bank shares have long had a reputation as heavy hitters when it comes to dividends, and for good reason.

This continues today, with Westpac’s dividends bouncing back with a vengeance over 2021 and 2022. Right now, the bank is offering a fully franked dividend yield of over 5.5%.

This bank may have had its ups and downs over the past few years. But I think Westpac’s indomitable position in Australia’s economy and financial services sector makes it a great pick if you want to get a chunky stream of passive income started right away.

Motley Fool contributor Sebastian Bowen does not own shares in Westpac Banking Corp.

The post Top ASX passive income shares to buy in May 2023 appeared first on The Motley Fool Australia.

Where should you invest $1,000 right now? 3 dividend stocks to help beat inflation

This FREE report reveals 3 stocks not only boasting sustainable dividends but that also have strong potential for massive long term returns…

See the 3 stocks
*Returns as of April 3 2023

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];[property] = defaultValue;

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);

More reading

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Coles Group. The Motley Fool Australia has recommended Metcash and Westpac Banking Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s