How many Santos shares do I need to buy for $10,000 a year in passive income?

Aiming to tap into Santos Ltd (ASX: STO) shares for some handy extra passive income?

You’re not alone.

The S&P/ASX 200 Index (ASX: XJO) energy stock has made two annual dividend payments every year since 2019.

We’ll look at how many Santos shares you’d need to buy today to earn a $10,000 annual passive income below.

But first, a few important reminders.

Calculating yields and diversifying your passive income portfolio

Perhaps the biggest thing to keep in mind is that, while we’ll focus solely on Santos shares, a diversified income portfolio will include far more than just one stock. While there’s no magic number, somewhere in the range of 10 to 20 stocks is a decent ballpark figure.

Ideally, these will operate across various sectors and locations. That should reduce the risk that your passive income stream will take a big hit if any particular company or sector runs into trouble.

Second, remember that the yields you usually see quoted are trailing yields. These are based on the past 12 months of dividend payments. Future yields may be higher or lower depending on a range of company-specific and macroeconomic factors.

For the passive income you might expect from Santos shares, these include the company’s cost management and, crucially, the ever-changing price of oil and gas.

As you know, the oil price has rocketed this year amid the war in Iran. On Thursday, Brent crude oil was trading for US$112 per barrel, up more than 83% year to date. That could see a material uptick in Santos’ profits over the coming months, and drive a material increase in the ASX 200 energy stock’s upcoming dividends.

But we won’t speculate here and instead stick to the trailing dividend yields.

With that said…

Tapping into Santos shares for a $10,000 annual passive income

Santos paid a partly franked interim dividend of 20.3 cents a share on 1 October.

The ASX 200 oil and gas stock will pay an unfranked final dividend of 14.5 cents a share next week, on 25 March. It’s a bit late to tap into that latest passive income payout, as Santos shares traded ex-dividend on 23 February.

Over the past year, then, Santos has paid (or will shortly pay) a total of 34.8 cents a share in dividends.

So, to secure a $10,000 yearly passive income, you’d need to buy 28,736 Santos shares today.

How much would that cost?

At the time of writing, Santos shares trade at a multi-year high of $8.03 apiece, up more than 30% in 2026.

For a $10,000 annual passive income, then, you’d need to invest $230,750 today. Or you can always invest a smaller amount each month. You’ll reach your income goal in good time.

Santos shares trade on a partly franked trailing dividend yield of 4.3% at the time of writing.

The post How many Santos shares do I need to buy for $10,000 a year in passive income? 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.