How to invest $10,000 in ASX dividend shares in May

A businessman on a road raises his arms as dollar notes rain down on him.

A businessman on a road raises his arms as dollar notes rain down on him.

So you’d like to invest in ASX dividend shares this May? Excellent idea. Dividend shares provide many wealth-building benefits. They enable an investor to participate in the wealth creation of Australian businesses, all while securing a stream of passive income in the form of the regular payments that the best dividend shares pay their investors regularly.

But deciding to invest is the easy part. Choosing which investments to put your hard-earned money into is where the rubber hits the road.

So here are some ideas on the best places to invest for dividend cash flow this May.

Where to spend $10,000 on ASX dividend shares this May

I would start by deploying $2,500 each into Coles Group Ltd (ASX: COL) and Telstra Group Ltd (ASX: TLS). Both Coles and Telstra are the bluest of ASX blue chip shares. Both companies have a long and proud history of delivering robust dividends to their ASX investors.

Sure, both companies offer solid, fully franked yields today. On recent pricing, Coles can boast of a dividend yield of 3.63%, while Telstra has 3.94% on the table. 

But the primary reason to consider these two companies is their defensiveness. Coles and Telstra were two of the few ASX dividend shares that held their dividend payments steady throughout the COVID-ravaged years of 2020 and 2021. For anyone worried about a recession this year, this should provide a lot of comfort.

Let’s now turn to Westpac Banking Corp (ASX: WBC). Banks tend to be a little more cyclical than the likes of Coles or Telstra, evidenced by Westpac’s patchy dividends over 2020 and 2021. But fundamentally, Westpac is a strong and robust business and is heavily entrenched in the Australian financial landscape as a big four bank.

Additionally, Westpac’s current dividend yield of more than 6.3% (also fully franked) is too large to ignore. For immediate and robust cash flow, Westpac could be another great choice for an additional $2,500.

Rounding out with an income ETF

Finally, let’s consider an exchange-traded find (ETF) for our final $2,500 in the Vanguard Australian Shares High Yield ETF (ASX: VHY). ETFs are a great way of obtaining instant diversification with one easy investment. This can be especially useful in building an income portfolio.

The three shares named above are all great companies. But they only cover small corners of the ASX. What about retail shares or mining giants? Healthcare shares or energy stocks? That’s where this ETF can come in.

It is specifically designed to only hold ASX shares that offer significant dividend income to investors. At present, its portfolio comprises around 60 ASX dividend shares. These include everything from miner BHP Group Ltd (ASX: BHP) and retailer JB Hi-Fi Ltd (ASX: JBH) to health insurance kingpin Medibank Private Ltd (ASX: MPL) and energy titan Woodside Energy Group Ltd (ASX: WDS).

This ETF currently has a trailing yield of 5.81%.

As such, the Vanguard High Yield ETF could be a great way to spend the remaining $2,500 we have earmarked for ASX dividend shares this May.

The post How to invest $10,000 in ASX dividend shares in May appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has positions in Telstra Group and Vanguard Australian Shares High Yield ETF. 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 and Telstra Group. The Motley Fool Australia has recommended Jb Hi-Fi, Vanguard Australian Shares High Yield ETF, 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.

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