How much could a $300,000 ASX share portfolio pay in dividends?

The ASX isn’t only a great place to grow your wealth, but also somewhere you can use your wealth to generate huge passive income from dividends.

But just how much income could you receive from a portfolio? Let’s take a look and see what could be possible from a $300,000 investment portfolio.

Wealth generation

Firstly, if you’re lucky enough to already have a portfolio valued at $300,000, you can skip this section.

But if you don’t, let’s quickly look at how you could potentially get there.

It’s worth noting that how long it takes will depend upon your starting balance, how much you can invest, and the performance of ASX shares.

Over the last few decades, ASX shares have generated an average return of approximately 10% per annum including dividends.

There’s no guarantee that this will be the case in the future, but as it is in line with long-term averages on Wall Street, we’re going to assume that this trend continues for the purpose of our calculations.

If you can afford to invest $12,000 a year into ASX shares and earn the market return (and reinvest your dividends), you will get to the $300,000 mark after just over 12 years. Investing less (or more) will alter the timeline.

ASX dividends from $300,000

Now we’re all on the same page, let’s move onto the next step.

Investors have a few options with their portfolio. They can settle for the average dividend yield of the ASX, which is normally around 4%, or they can focus on high yield ASX shares.

If you go for the standard 4% dividend yield, you can expect to receive $12,000 of dividends from your ASX shares.

But if you focus on high yield ASX shares you can generate even more income.

High yield options

One easy way to do this is the Vanguard Australian Shares High Yield ETF (ASX: VHY). It gives you exposure to a portfolio filled with many of the biggest payers on the Australian share market.

This includes BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Fortescue Ltd (ASX: FMG), and Transurban Group (ASX: TCL).

At present, it trades with a dividend yield of 5.1%. This means that a $300,000 investment portfolio would produce $15,300 of income.

But it isn’t likely to stop there. Over the last five years, the ETF has gained 25% excluding dividends. If it did the same in the future, your $300,000 portfolio would grow to be worth $375,000.

And earning a 5.1% dividend yield on that amount would mean annual dividend income of $19,125.

The post How much could a $300,000 ASX share portfolio pay in dividends? appeared first on The Motley Fool Australia.

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

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

More reading

• Here’s the iron ore price forecast through to 2027
• 3 high-yield ASX dividend shares that pay cash every quarter
• Here is the profit forecast to 2026 for CBA shares
• Buy these ASX ETFs for a second income
• After a rough start to 2024 these 3 ASX 200 mining stocks are looking cheap to me

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF. 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 https://ift.tt/4xYtzIi