Need passive income? Turn $5,000 into $25 every month with these ASX shares

ASX shares paying good passive income could be exactly what income-seeking investors are looking for. If an investor has $5,000, targeting a dividend yield of at least 6% could unlock $25 of dividends every month.

There are very few investments on the ASX that pay a dividend every month. But, by combining a few different ASX shares, we can get a dividend paid every month.

Rural Funds Group (ASX: RFF)

Firstly, I’d start by investing $1,700 in Rural Funds shares. The business is expecting to pay a total distribution of 12.2 cents per unit in FY23, which is a distribution yield of 6.1%. That would pay $25.50 in January, April, July, and October if the next four payments are the same size.

This is a real estate investment trust (REIT) invested in a farm portfolio across cattle, vineyards, almonds, macadamias, sugar, and cotton.

Management tries to grow its distributions by 4% per annum, which is partly helped by the rental increases built into its contracts. It is also investing in improvements at its farms to grow their rental and capital value.

GQG Partners Inc (ASX: GQG)

Next, I’d invest $1,250 in fund manager GQG Partners, which has committed to pay out most of its profit each year. This means the business can offer a high dividend yield.

Commsec numbers suggest the ASX dividend share could pay a dividend of 12 cents per share in FY23. That would be a dividend yield of 8.33% in the current financial year.

For investors, this could lead to $26 in passive income in June, September, December, and March.

Its profit and dividend can grow over time if it’s able to continue growing its funds under management (FUM), thanks to investment performance and fund inflows. I think its investment style and track record of long-term outperformance will help it deliver on FUM growth.

Charter Hall Long Wale REIT (ASX: CLW)

Finally, I’d invest the rest of the money, $2,050, into this REIT which owns a diversified portfolio of properties across Australia. It owns service stations, Bunnings Warehouse properties, logistics properties, telecommunications buildings, and so on.

Commsec numbers suggest that the ASX dividend share could pay a total distribution per unit of 6.6%. This would unlock $33.80 of quarterly passive income in May, August, November, and February.

While interest rates are hurting in the short term, it has benefited from inflation with stronger rental income. It’s helpful that the business has long-term rental contracts locked in.

Foolish takeaway

Between these three names, every month is covered and investors will get at least $25 of monthly passive income. Of course, that’s not enough to retire on. But, we can easily multiply that $5,000 by larger numbers to see more dividends roll in. For example, investing $50,000 would result in at least $250 per month.

The post Need passive income? Turn $5,000 into $25 every month with these ASX shares appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Rural Funds Group. 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 Rural Funds Group. 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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