Using superannuation is a fantastic way to build wealth and create retirement passive income.
Lower taxes in the wealth-building phase and potentially no taxes in the retirement phase (depending on the superannuation balance) are a very compelling proposition. An Australian (retiree) investor is likely better off in net income terms to have dividends flow through superannuation than in their own name.
Everyone has a different taxation position, so I’m not going to focus on tax for the rest of the article.
What’s needed for $7,500 of monthly passive income?
I’d bet that many Australians would love to have $7,500 of passive income hit their bank account every month. In annual terms, that’s $90,000 per year of dividends.
The required superannuation balance to generate $90,000 in annual dividends depends on the portfolio’s dividend yield. It’s a similar situation to the interest rate required from a term deposit or savings account.
With a 5% yield, someone would need a $1.8 million portfolio (ignoring tax) to make $90,000 per year.
With a 6% yield, an investor would need a $1.5 million portfolio to make $90,000 per year, or $7,500 per month.
With a 4% yield, an investor would need a $2.25 million portfolio for the passive income goal.
I often talk about my appreciation of the diversified investment conglomerate Washington H. Soul Pattinson and Co Ltd (ASX: SOL) as an option for reliable dividends, but its grossed-up dividend yield, including franking credits, is only around 3.5% right now.
There are plenty of ASX dividend share options that can provide a higher dividend yield, so let’s run through some of the possibilities.
ASX dividend share ideas
How good would it be to have a portfolio of stocks in superannuation with dividend yields of 5%, 6%, or even more to generate the monthly passive income?
Charter Hall Long WALE REIT (ASX: CLW) is a real estate investment trust (REIT) that owns and leases various types of property, including service stations, hotels, telecommunication exchanges, distribution centres, and government-related buildings (such as Geosciences Australia). It expects to pay 25.5 cents per security in FY27, which translates to a yield of 7.8%.
Another idea is listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF), which uses a combination of normal investing and short selling to look for opportunities across both ASX shares and international shares. It’s increasing its dividend every quarter and could pay a grossed-up dividend yield of 5.1% in FY27, including franking credits.
Next, I want to highlight another REIT called Centuria Industrial REIT (ASX: CIP), which owns a portfolio of industrial properties across Australian cities. It’s growing its distribution by another 3% in FY27 despite the higher interest rates, thanks to rising demand for industrial land for uses like distribution centres (including e-commerce purposes), refrigerated space (for food and medicine), and data centres. Its forecast yield is 6.1%.
Another name I’d highlight is the LIC MFF Capital Investments Ltd (ASX: MFF), which is increasing its payout every six months. It largely invests in strong international shares with good prospects for dividend growth. I expect it will pay an annual dividend of 25 cents per share in FY27, translating into a grossed-up dividend yield of 6.9%, including franking credits.
A portfolio of the above names, as well as other ASX shares, could be compelling to unlock a monthly passive income of $7,500 (or more) in superannuation.
The post How much is needed in superannuation to target a $7,500 monthly passive income? appeared first on The Motley Fool Australia.
More reading
- How much passive income can I earn off a $700,000 superannuation balance?
- The 3 factors that have helped me build a six-figure ASX share portfolio at 35
- CBA vs Soul Patts: Which ASX share wins in 2026?
- Where to invest $10,000 in ASX dividend shares today
- How much is needed in superannuation to target a $100,000 annual passive income?
Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund, Mff Capital Investments, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Mff Capital Investments and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
