2 ASX passive income ideas I’d use to generate $400 a month in 2027

Certain ASX passive income ideas could be excellent picks to make $400 per month of dividends in 2027.

If dividend income is a key focus, then I’d want to concentrate on names that can provide defensive and even growing payouts.

I like stocks with defensive earnings because they’re more likely to sustain future passive income payouts. Let’s look at two top contenders.

Medibank Private Ltd (ASX: MPL)

Medibank is the leading private health insurance business in Australia with its Medibank and ahm brands.

In my view, the company has defensive earnings because healthcare is an essential service, particularly for older Australians.

Australia’s ageing and growing population gives the company compelling earnings tailwinds in the coming years.

The Medibank annual dividend was hiked by 6.7% in FY26 to 19.2 cents per share, following a 6.7% rise in group operating profit to $813.5 million.

I think the dividend is likely to grow again in FY27 because of the positive outlook comments.

It’s looking to grow market share with resident policyholders, it expects to deliver “solid” gross profit growth with non-resident private health insurance. The Medibank health segment profit is expected to grow 25%, and it continues to look for useful bolt-on acquisitions.

The passive income projection on Commsec suggests the business could pay an annual dividend per share of 21.5 cents in FY27. That would be a grossed-up dividend yield of 6.7%, including franking credits, at the time of writing.

Rural Funds Group (ASX: RFF)

The other ASX passive income idea I want to highlight is this real estate investment trust (REIT) which owns farmland across Australia.

The farms it owns include almonds, cattle, macadamias, cropping, and vineyards. Those properties are spread across Australia’s mainland states, though Queensland and NSW account for most of the Rural Funds portfolio in dollar terms.

I think it’s a pleasing option for passive income because it pays a distribution quarterly, and the distribution yield is solid.

It has maintained its annual distribution at 11.73 cents per unit in the last few years amid high interest rates, which I think is a pleasing record of stability.

I think there’s good scope for future distribution growth because of the rental indexation built into its lease contracts. Some of Rural Funds’ rent grows at a fixed annual rate each year, while a significant portion of the rest grows in line with inflation.

It expects to pay an annual distribution per unit of 11.73 in FY27, which translates into a forward distribution yield of 5.9%.

$400 per month of passive income

I think both of the above businesses are among the top ASX passive income share options. To generate $400 per month, we’re talking about an annual goal of $4,800.

Between them, those two ideas have an average dividend yield of 6.3%, if we include the franking credits. Therefore, with a total investment of $76,191, someone could generate that target dividend amount.

But these aren’t the only stocks I’d choose to buy for dividend income.

The post 2 ASX passive income ideas I’d use to generate $400 a month in 2027 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.