The ASX dividend portfolio I’d build for financial independence

Financial independence isn’t about chasing the highest dividend yields or finding the next hot stock.

For me, it is about building a portfolio that can reliably pay cash year after year, through good markets and bad, while still growing enough to protect against inflation.

If I were constructing an ASX dividend portfolio with financial independence as the end goal, I would focus on three core principles: reliability, diversification, and sustainability.

The aim wouldn’t be maximum income today, but dependable and growing income over many decades.

The foundation

Every dividend portfolio needs businesses that provide services people simply can’t do without. This is where regulated infrastructure and utilities shine.

I would start with APA Group (ASX: APA). As one of Australia’s largest energy infrastructure owners, it generates stable cash flows from long-term contracts linked to inflation. It may be boring, but it is precisely the kind of dependable income generator that suits a financial independence portfolio.

Transurban Group (ASX: TCL) is another ASX dividend share I would include. It owns critical transport assets with pricing power and decades-long concessions. Traffic volumes have been growing for years and look likely to continue this trend due to population growth and urbanisation.

Defensive income

I would also want exposure to ASX dividend shares that dabble in everyday essentials. After all, these businesses tend to hold up well even when economic conditions deteriorate.

Woolworths Group Ltd (ASX: WOW) fits that bill nicely. Supermarkets generate consistent cash flow, and Woolies has a long history of paying dividends. And while its dividend yield isn’t always the highest, the reliability of its earnings and payouts is what matters when building income you can depend on.

Telstra Group Ltd (ASX: TLS) would also earn a place in my portfolio. Australia’s largest telco benefits from recurring revenue, strong market share, and rising data demand. Another positive is that its dividend profile has improved significantly in recent years after it simplified its business and cut costs.

Diversification

Finally, I would add a diversified ASX ETF to smooth out risk and reduce reliance on individual stocks.

The Vanguard Australian Shares High Yield ETF (ASX: VHY) would be my pick. It provides exposure to a broad basket of dividend-paying Australian shares, helping to spread risk while delivering attractive income.

Combined with the individual ASX dividend shares, I think this would help build a strong portfolio that could allow me achieve financial independence over the long term.

The post The ASX dividend portfolio I’d build for financial independence appeared first on The Motley Fool Australia.

More reading

• The three ETFs I’d buy to set up a starter portfolio
• My top 10 ASX stocks to buy for 2026
• 5 things to watch on the ASX 200 on Tuesday
• 5 top ASX dividend shares to buy now
• 3 no-brainer ASX 200 shares to buy with $5,000

Motley Fool contributor James Mickleboro has positions in Woolworths Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group, Telstra Group, Transurban Group, and Woolworths 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.