How I’d aim for $10,000 a year in superannuation boosting passive income buying ASX shares

Regardless of the size of your superannuation savings pool, an extra $10,000 a year in passive income is always welcome.

If you’re looking to give your retirement lifestyle a boost, then buying the right ASX dividend shares offers one of the best means I know of to achieve that extra income.

One of the advantages ASX investors have, which investors in US and many international stocks don’t, is that a lot of ASX dividend shares come with full franking credits. And these credits won’t be directly impacted by the Federal Budget’s proposed tax changes.

If you’re not familiar, franking credits mean that you get credit for some, or all, of the 30% in corporate taxes that the companies you’re investing in have already shelled out to the ATO on the profits they make.

How much to invest in ASX shares for $10,000 a year in passive income?

Now, just how much you need to invest in ASX dividend shares today to bank that $10,000 in annual passive income depends on how long you have before you plan to retire and tap into your superannuation savings.

One of the golden rules of investing is that the earlier you start, the better your results.

That’s thanks to the magic of compounding.

Here’s what I mean.

Assuming you can achieve an average dividend yield of 6.5% (as we’ll look at below), you’d need to invest $153,846 in ASX shares today to add $10,000 a year to your superannuation savings.

Now, here’s the power of compounding at work.

By investing in a combination of blue-chip stocks and ASX growth shares, I believe you can achieve an average annual return of 10.5%.

By investing just $100 a month in ASX shares, you’d then have $21,386 in 10 years, $81,860 in 20 years, and the required $153,846 somewhere in year 26.

So, what are you waiting for?

Two superannuation boosting ASX dividend shares to consider today

There are a number of quality ASX dividend shares you may wish to buy to top up your superannuation income.

Two passive income stocks you might want to dig into are ASX 200 oil and gas producer Woodside Energy Group Ltd (ASX: WDS) and ASX 300 alternative investment manager Regal Partners Ltd (ASX: RPL).

Both companies pay fully franked dividends. And, importantly, both have outperformed their benchmarks over the past year. Meaning we’re not chasing yields at the expense of capital losses.

Indeed, at the time of writing, Woodside shares have gained 13.8% over the past 12 months while the Regal Partners share price has surged 39.6%. For some context, both the ASX 200 and the ASX 300 have gained less than 5% over the past year.

As for that superannuation boosting passive income, Woodside shares trade on a 5.7% fully franked trailing dividend yield. And Regal Partners shares trade on an even juicier 7.3% fully franked trailing dividend yield.

Based on those trailing yields, an equal investment in each ASX dividend stock would then see you earning a 6.5% yield on Woodside and Regal Partners shares.

The post How I’d aim for $10,000 a year in superannuation boosting passive income buying ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. 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 no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.