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

ANZ Group Holdings Ltd (ASX: ANZ) shares have long been popular with passive income investors for their lengthy track record of delivering reliable, twice-yearly dividend payments.

The bank even made two payments in the pandemic-confounded year of 2020.

So, if you’re aiming to bank an extra $10,000 a year in passive income, ANZ shares are well worth investigating.

Atop those regular dividend payments, the S&P/ASX 200 Index (ASX: XJO) bank stock has also delivered some market-beating capital gains over the past year.

ANZ shares closed on Friday, trading for $37.69. That sees the stock up 34.4% in 12 months, racing ahead of the 14.2% one-year gains posted by the benchmark index.

Now, we’ll dive into how many ANZ shares you might need to buy for an extra $10,000 yearly passive income below.

But first, a few important reminders.

Diversify amid an uncertain future

First, while we’re only looking at the dividends on offer from ANZ shares here, a properly diversified passive income portfolio will include many more than just one stock. While there’s no magic number that suits everyone, somewhere around a dozen is a decent ballpark figure.

Ideally, these ASX dividend stocks will operate in various sectors and locations. That will help reduce the risk that your income stream will take an unexpected hit if a particular company or industry runs into a rough patch.

Also, bear in mind that the yields you generally see quoted are trailing yields. Future yields may be higher or lower depending on a range of company specific and macroeconomic factors.

If you’re buying ANZ shares, these include the ASX 200 bank’s risk management and cost controls. ANZ’s future profits and dividends will also be affected by the trajectory of interest rates and the broader performance of the Australian economy.

With that in mind…

Banking on ANZ shares for an annual $10,000 passive income

ANZ paid an interim dividend of 83 cents a share on 1 July. The ASX 200 bank paid a final dividend of 83 cents a share on 19 December, both franked at 70%, for a full-year payout of $1.66 a share.

At Friday’s closing price, this sees ANZ shares trading on a partly franked trailing dividend yield of 4.4%.

And it means that if you’re aiming for $10,000 a year in passive income, you’d need to buy 6,024 ANZ shares today.

How much would that cost?

At Friday’s closing price of $37.69 a share, you’d need to invest $227,045 in ANZ shares to bank $10,000 a year in passive income (based on the trailing yields).

Now, that’s a sizeable investment to make at one go.

But that’s okay.

You can always invest a smaller amount on a regular basis, and you’ll reach your income goal in good time.

The post How many ANZ 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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• In the midst of economic turmoil, what does Morgan Stanley say the ASX banks are worth?
• ANZ, NAB, Westpac, and CBA shares: Analysts rate 3 to sell, and 1 to buy
• What’s going on with the ANZ share price?
• ASX 200 shares rip with financials leading a remarkable recovery last week

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.