If you’re looking to buy some ASX dividend shares for your portfolio, then I think the ones below could be quality options. 

Both have strong businesses and offer generous dividend yields. Here’s why I would buy them when the market reopens:

Fortescue Metals Group Limited (ASX: FMG)

The first ASX dividend share to look at is Fortescue. I’m a big fan of the iron ore producer due to its world class and low cost operations. Another positive is that the company has been increasing the quality of its grade in recent times. This has allowed Fortescue to take advantage of the high prices that iron ore is commanding right now due to robust demand and supply disruption. Overall, I believe it is well-positioned to deliver bumper free cash flows in FY 2020 and FY 2021. And with the majority of its free cash flow likely to be returned to shareholders, this bodes well for its dividends. I estimate that its shares currently offer a fully franked 7% FY 2021 yield.

Rural Funds Group (ASX: RFF)

Another dividend share for income investors to buy is Rural Funds. I like the agriculture focused property group due to its high quality property portfolio and its ultra long tenancy agreements. At the end of the first half, Rural Funds’ weighted average lease expiry stood at a lengthy 11.5 years. Combined with rental increases that are built into its leases, this gives the company great visibility with its future earnings. So much so, management has already revealed what it plans to pay shareholders in FY 2021. It has provided distribution guidance of 11.28 cents per share for next year. This works out to be a forward 5.5% distribution yield. I think this makes Rural Funds a great long term option in this low interest rate environment.

More reading

• How to build a $20,000 passive income with ASX shares
• How to replace your entire wage with dividends
• 3 ASX dividend shares for retirees
• These quality ASX dividend shares have very juicy yields
• ASX shares are in a bull market. What should investors do now?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Are you looking for an extra income stream? I believe that investing in ASX shares paying high dividends is an excellent strategy for achieving this. My top 3 picks right now are BHP Group Ltd (ASX: BHP), Telstra Corporation Ltd (ASX: TLS) and Wesfarmers Ltd (ASX: WES) shares.

All 3 of these ASX 200 shares pay strong dividends and are fully franked. This can further boost your income as you get a 30% tax rebate.

Wesfarmers shares

Wesfarmers is a highly diversified business. I believe this is the group’s core strength.

It has operations across a broad spectrum of the Australian economy. This provides it with a buffer to any industry-specific challenges that may come its way.

Wesfarmers has operations in general retail segments including merchandise and office supplies. It also has a number of industrial divisions with operations in energy and fertilisers, and industrial and safety products.

It continues to evolve its online offering, which has seen strong demand during the coronavirus pandemic. This includes its online-only channel via Catch and its Target and Kmart online offerings.

The Wesfarmers share price is sitting at $41.72 and offers a very nice forward fully franked dividend yield of around 3.6%.

BHP shares

BHP has diversified operations across a range of divisions. These include iron ore, as well as copper and aluminium.

The mining giant is definitely my pick of the resource companies listed on the ASX right now.

In its April quarterly activities report, it noted that it continues to expect to generate strong cash flows. This is despite the continued challenges it faces in light of the coronavirus pandemic.

Also, with signs of global markets improving, this could see its business pick up further in the second half of the year.

Based on current earnings with a share price of $36.34, BHP offers a very attractive forward fully franked dividend yield of around 5.2%.

Telstra shares

In a recent market update, Australia’s largest telecommunications provider revealed that it is on track to achieve most of its T22 strategy goals.

This includes a goal to reduce its underlying fixed costs by as much as $2.5 billion annually by the end of FY 2022. The telco giant is evolving into a leaner, more efficient telco provider.

Telstra has also witnessed strong demand for its services throughout the pandemic so far. This has helped to boost its recent performance.

I believe that Telstra remains well placed for long-term growth over the next five to 10 years.

Growth over the next few years will be partly driven by its market-leading position in the rollout of 5G services.

In addition, Telstra provides investors with a forward fully franked dividend yield of around 3.1% with a current share price of $3.23.

More reading

• Where I’d invest $2,500 in ASX shares today
• Top brokers name 3 ASX 200 shares to buy next week
• How to replace your entire wage with dividends
• Is this ASX small cap the best placed to benefit from the $700m HomeBuilder grant?
• These quality ASX dividend shares have very juicy yields

Motley Fool contributor Phil Harpur owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Want high-paying dividends? Try Wesfarmers shares and these 2 other ASX options appeared first on Motley Fool Australia.

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The current economic environment has got many people thinking about passive income and ASX shares.

The sum of $20,000 creates a baseline level of income that can help to pay the bills and basic living expenses for many individuals.

Of course, that doesn’t mean you can’t continue to work. But the potential to add $20,000 without lifting a finger is enticing to most savvy investors.

So, how can you build a strong passive income stream with ASX shares in 2020?

Save as much as you can

This is a critical step in the process. There’s no magic cure here that will build your wealth overnight.

Trimming down expenses where possible is a great first step. That means creating a budget and looking at cutting down on discretionary spending.

All of this extra income can go towards investing in ASX shares. Whether it’s an extra $500, $5,000 or $50,000 per year, strong savings habits are crucial to developing a passive income.

Invest in ASX shares for a passive income

Once you’ve got strong personal finance habits in place, it’s time to start investing.

There are many ASX shares like Fortescue Metals Group Limited (ASX: FMG) with strong dividend yields.

Of course, dividend yields can be misleading but are the best income indicator we have right now.

At the time of writing, Fortescue shares are yielding 6.88% while Harvey Norman Holdings Ltd (ASX: HVN) shares are yielding 9.18%.

If you can consistently save $10,000 per year and invest in a diversified ASX share portfolio, you can quickly generate a $20,000 passive income stream.

If we assume a 7% average dividend yield, we would need to build a $285,714 portfolio for a $20,000 per year passive income.

Let’s say we save $10,000 per year and invest it in ASX shares. If we receive a 7% yield and reinvest it into these shares, we could generate a $21,588 passive income in just 17 years.

Foolish takeaway

It’s easy to think that creating a passive income from ASX shares is all too hard.

However, while the above calculation is a simplified example, it does demonstrate that discipline and a strong dividend portfolio can help you build your long-term wealth.

More reading

• 2 strong ASX dividend shares to bolster your income
• These quality ASX dividend shares have very juicy yields
• ASX shares are in a bull market. What should investors do now?
• 3 ASX dividend shares with big yields above 9%
• Should the Xero share price have a P/E ratio of 4,000?

Motley Fool contributor Ken Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How to build a $20,000 passive income with ASX shares appeared first on Motley Fool Australia.

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