A $5,000 annual passive income stream from ASX shares could make a meaningful difference to many investors.

It could help cover regular expenses, fund a few extras, or simply provide more financial flexibility.

So, how would I go about building towards that amount?

How much you need for this passive income

The starting point is fairly simple. A portfolio with a dividend yield averaging 4% would need to be worth around $125,000 to generate $5,000 a year in dividends.

At an average yield of 5%, the required portfolio value falls to roughly $100,000.

I would probably aim somewhere within that range.

There are ASX shares offering much higher yields, but I would be careful about building the plan around them. A large yield can sometimes reflect concerns about the business or expectations that the dividend will eventually be reduced.

I would prefer a slightly lower starting yield from companies where I have more confidence in the underlying earnings.

What might I buy?

National Australia Bank Ltd (ASX: NAB) is the type of passive income share I would consider.

Its strong position in business banking gives it relationships with Australian companies across lending, deposits, payments, and everyday banking. I think that provides a solid base for dividends over time.

Telstra Group Ltd (ASX: TLS) could also have a place.

Mobile and internet services have become part of everyday life, giving Telstra relatively resilient demand. The company has also made a sustainable and growing dividend an important part of its long-term plans.

I would probably add a company such as Coles Group Ltd (ASX: COL) as well.

Its dividend yield may not be as high, but grocery demand is dependable and analysts expect earnings and dividends to grow over the next few years.

I like that combination because passive income does not have to mean chasing the largest payment available today. Growing dividends can become increasingly valuable over a long holding period.

Keep the income diversified

I would also spread the portfolio across several industries.

Owning only banks might produce an attractive yield, but it would leave the income stream heavily exposed to the same economic and regulatory risks.

Adding telecommunications, consumer staples, healthcare, infrastructure, or other dividend-paying businesses could make the portfolio more resilient.

Franking credits can provide another benefit for eligible Australian investors, although their value will depend on individual tax circumstances.

Once the portfolio was generating around $5,000 annually, I could take the dividends as income when I needed them. Until then, I would generally reinvest the payments and keep adding to the portfolio.

Foolish takeaway

I think a portfolio worth somewhere around $100,000 to $125,000 is a sensible starting target for generating $5,000 a year in passive income.

From there, I would focus on owning strong businesses with dividends I believe can be maintained and ideally increased over time.

For me, that is a much more comfortable way to build an income stream than simply hunting for the highest yields on the ASX.

The post How I’d target $5,000 a year in passive income from ASX shares appeared first on The Motley Fool Australia.

More reading

• These ASX shares benefit from a high Aussie dollar
• No savings at 30? Here’s how I’d aim to retire early with $1 million buying ASX shares
• Looking for income for life? These are the ASX shares I’d consider
• ASX 200 bank shares led a financial sector rebound last week
• Is Coles still one of the best defensive ASX shares to own?

Motley Fool contributor Grace Alvino 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 positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

BHP Group Ltd (ASX: BHP) shares are outperforming today.

Shares in the S&P/ASX 200 Index (ASX: XJO) mining giant closed on Friday trading for $62.25. In late morning trade on Monday, shares are swapping hands for $63.00 apiece, up 1.2%.

For some context, the ASX 200 is up 0.1% at this same time.

That’s today’s price action for you.

Now, why is everyone talking about BHP shares and China?

China eyeing more control over BHP shares

China has long been the top export market for Australia’s iron ore.

Indeed, the Middle Kingdom’s voracious appetite for the industrial metal, alongside copper and coal, have helped support BHP shares over the years.

You may also be aware that the Chinese government has long been trying to increase its influence over how iron ore prices are set. And to increase the nation’s own exposure to the metal.

In the latest developments, two anonymous sources familiar with the matter (referenced by various news sources, including Reuters) said that global steel making giant China Baowu Steel Group is looking at taking a 15% to 25% stake in BHP’s Jimblebar iron ore mine, located in Western Australia.

And Australia’s opposition government is not pleased with the development. The Coalition has said that Labor must not allow foreign entities to buy one of Western Australia’s top iron ore mines.

Responding to the media speculaitons putting BHP shares in the headlines, the miner said:

BHP notes the recent media speculation regarding a potential partnership involving part of the Western Australia Iron Ore (WAIO) business.

BHP has a long history of partnerships at its assets and regularly explores options that may create long-term value to its shareholders. WAIO remains central to BHP’s portfolio and BHP remains fully committed to WAIO and to Western Australia.

What’s the latest from the miner’s WA iron ore operations?

When BHP released its full-year FY 2026 results on 18 August, the miner reported a 1% year-on-year increase in total iron ore production to 265 million tonnes.

The bulk of that came out of WAIO, which produced 257 million tonnes of iron ore in FY 2026.

BHP also achieved a 1% increase in its underlying earnings before interest, taxes, depreciation and amortisation (EBITDA) from its iron ore division to US$14.5 billion.

Management provided FY 2027 iron ore production guidance in the range of 260 million to 272 million tonnes.

BHP shares closed up 2.7% on the day of the results release.

The post Why is everyone talking about China and BHP shares today? appeared first on The Motley Fool Australia.

More reading

• These ASX shares benefit from a high Aussie dollar
• This ASX 200 giant is up 37% in 2026. Is the pullback worth buying?
• Buy, hold, sell: Pro Medicus, BHP, CBA shares
• No savings at 30? Here’s how I’d aim to retire early with $1 million buying ASX shares
• What’s driving the ASX 200 higher today?

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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Last week, the Australian dollar crossed the 72 US cents mark for the first time in more than three months. Investors have today returned from the weekend to see our Aussie dollar at about the same level, currently buying 72.1 US cents. It’s quite a comeback for a currency that was, as recently as July, trading at under 70 US cents. Moves like this one can seem inconsequential. But they can have a real impact on the value of ASX shares, and Australian investors’ portfolios by extension.

Remember, the exchange rate really prices the value of our currency, which naturally has far-reaching consequences across our economy. There are countless factors that pay into what one currency trades at compared to another. I won’t pretend to know everything that has caused our dollar to appreciate by close to 5% over the past two months or so. But there’s little doubt that inflation (and interest rate) expectations, the ongoing wars in the Middle East and Europe, as well as concerns about the mounting levels of debt in the United States, are all playing a part.

What moves a dollar?

So what does a higher dollar mean for ASX investors, aside from the odd case of a healthy bout of nationalistic pride?

Well, at a simple level, the primary outcome from an increase in the value of the Aussie dollar is that exporting goods or services becomes cheaper for consumers and companies, while importing becomes more expensive. To illustrate, let’s say an agricultural company has to buy fertiliser every month for US$100 a bag. Back in July, that bag would have cost roughly $144.50. Today, that same bag would only set the buyer back by $138.90.

However, let’s say that a bushel of wheat that could be grown using that fertiliser costs US$700. Back in July, our company would have received over $1,000 in our local currency. Today, they would get just over $972.

Which ASX shares prosper from a higher Aussie dollar?

A higher Aussie dollar benefits companies that import more goods or services than they export, and punishes companies that export more than they import.

As such, it’s clear that the biggest losers from a higher Aussie dollar are our major exporters. Namely, our largest mining stocks. The likes of BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), Fortescue Ltd (ASX: FMG), Woodside Energy Group Ltd (ASX: WDS), and Northern Star Ltd (ASX: NST) are arguably some of the companies most exposed. So to are companies that report their earnings in US dollars. That includes CSL Ltd (ASX: CSL) and WiseTech Global Ltd (ASX: WTC).

Conversely, net importers will be lining up to enjoy the benefits of a higher Aussie dollar. That might be Ampol Ltd (ASX: ALD), which imports petroleum products to refine or on-sell. It could be Wesfarmers Ltd (ASX: WES), which receives a huge amount of its stock for Bunnings and OfficeWorks from overseas. Ditto with JB Hi-Fi Ltd (ASX: JBH) or Harvey Norman Holdings Ltd (ASX: HVN). It could even give Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) a bit of a margin boost on any food or drinks that are grown or manufactured beyond our shores.

Not all companies are winners or losers, though. Changes in our currency would have little to no impact on the earnings of something like Telstra Group Ltd (ASX: TLS) or Transurban Group (ASX: TCL).

Changes in the Aussie dollar can have a tangible impact on one’s ASX share portfolio. Keep that in mind if you’re wondering why one of your investments has been a bit of a laggard of late, or has jumped in value with no other obvious catalysts.

The post These ASX shares benefit from a high Aussie dollar appeared first on The Motley Fool Australia.

More reading

• How I’d target $5,000 a year in passive income from ASX shares
• Why is everyone talking about China and BHP shares today?
• How Woodside shares are building a ‘unique position’ to supply global LNG markets
• What Warren Buffett’s investing style can teach superannuation investors
• This ASX 200 giant is up 37% in 2026. Is the pullback worth buying?

Motley Fool contributor Sebastian Bowen has positions in CSL and Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Transurban Group, Wesfarmers, and WiseTech Global. The Motley Fool Australia has positions in and has recommended Harvey Norman, Telstra Group, Transurban Group, and WiseTech Global. The Motley Fool Australia has recommended BHP Group, CSL, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.