54,543 shares of this high-yield ASX dividend stock pay an income equal to the Age Pension

The high-yield ASX dividend stock APA Group (ASX: APA) is one of the top picks out there for passive income, in my opinion. I’d rather own shares of it than receive the Age Pension.

Australia’s Age Pension is one of the most generous in the world. It’s great that retirees have that safety net, but I like the idea of income coming into my bank account from assets I own myself.

APA is one of the biggest energy businesses on the ASX. Its main asset is a network of gas pipelines that spans the country. It also owns gas power stations, gas storage, gas processing, solar farms, wind farms, and electricity transmission.

Australia needs energy for residential and business usage, so APA plays an important role in Australian society. It actually transports half of the nation’s gas usage, so it’s an essential part of the national energy picture.

Let’s take a look at how an investor could use the high-yield ASX dividend stock to match the Age Pension.

Passive income guidance

I view APA as one of the most impressive passive income businesses on the ASX because of how consistently it has increased its payout. Of course, past dividend growth is not a guarantee of future dividend growth.

APA has increased its annual distribution for 22 years in a row. That’s the second-longest payout growth streak for a business on the ASX.

The business has provided distribution guidance that will take it to 23 years of consecutive growth.

APA management expects the business to hike its payout to 59 cents per security. At the time of writing, that represents a forward distribution yield of 5.6%, which I think is an excellent starting point and extremely competitive against the best term deposit rates right now.

Its earnings and cash flow are growing thanks to inflation-linked revenue, new energy projects being built and completed, and acquisitions.

Equal the Age Pension

Australian retirees recently received a payment increase, which is great news during this period of higher inflation and cost of living.

The maximum Age Pension that a single Australian can receive is $1,237.70 per fortnight. That translates into an approximate annualised figure of $32,180.

If an investor wanted to receive $32,180 of annual income from the high-yield ASX dividend stock from its projected FY27 payout of 59 cents per security, that investor would need to own 54,543 APA Group shares.

Of course, diversification is an important element of investing for passive income. I wouldn’t have 100% of my portfolio invested in APA shares; I’d spread it across a number of ASX shares that can generate returns.

The post 54,543 shares of this high-yield ASX dividend stock pay an income equal to the Age Pension appeared first on The Motley Fool Australia.

More reading

• APA Group unveils $1.3bn Brigalow Power Plant deal to underpin growth
• Where to invest $20,000 in ASX dividend shares for passive income
• How much is needed in superannuation to target a $10,000 monthly passive income?
• Where to invest as interest rates charge higher
• How to build a $50,000 passive income from ASX shares

Motley Fool contributor Tristan Harrison 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 positions in and has recommended Apa Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.