Author: openjargon

The investing landscape looks quite different in 2026 than what ASX investors have become used to in recent years. Sure, we have seen the markets hit new all-time highs as recently as February. But that doesn’t mean it is plain sailing going forward, particularly for passive income investors.

Dividends have always been a major drawcard for investing in the Australian stock market. However, the run that the S&P/ASX 200 Index (ASX: XJO) has been on over the past two years or so has had the less desirable effect of lowering the dividend yields available from many popular ASX dividend stocks. Before 2020, for example, it would have been rare to see Commonwealth Bank of Australia (ASX: CBA) shares on a yield under 4%. Ditto with Telstra Group Ltd (ASX: TLS) or even Coles Group Ltd (ASX: COL). These days, it’s rare to see these stocks get close to 4%.

At the same time, interest rates have climbed to levels Australians haven’t seen for 15 years. The zero-rate world of COVID is most certainly behind us.

So dividend yields are down, and ‘safe’ cash investment interest rates are up. That leaves the passive income investors on the ASX in quite the pickle.

Where to invest for passive income in 2026?

Well, that’s the $64,000 question. There are a few factors investors need to contemplate before finding the solution that works for them.

The first, and arguably most important, of these factors is risk tolerance. Many passive income investors, particularly retirees, wish to preserve their capital as a priority. If that is the case, then having the majority of one’s investable capital invested in safe cash assets like term deposits is arguably a sound strategy. A few years ago, term deposits would get you 1% or 2% if you were lucky. But with the cash rate now at 4.35% (and perhaps set to rise even further), term deposits, or even savings accounts, with interest rates approaching 5.5%, are not uncommon.

Getting a 5.5% yield that comes with a government guarantee of capital protection (there are conditions to that) is certainly not something to turn one’s nose up at. Particularly if capital protection is a major concern.

Saying that, term deposits are still term deposits. For one, they don’t come with that added bonus of franking credits. The value of a fully franked dividend can push the grossed-up yield of a dividend stock from 3.5% to 5%. For another, just as they allow no downside risk, there’s no potential for capital returns either. Despite inevitable volatility, a good ASX dividend stock can be expected to appreciate in value over time, while spinning off dividend income. A term deposit’s capital, in contrast, will never appreciate.

The price of safety

That’s the other factor passive income investors need to accommodate. ASX shares have always outperformed cash investments over long periods of time, as the data has always shown. Investors need to accept that the price of capital protection is lower returns, even if interest rates are relatively high.

Of course, for some passive income investors, that protection is worth forgoing the potential of higher returns. But that won’t be optimal for all investors. At the end of the day, each passive income seeker needs to weigh up their own goals and tolerances, and decide which investment (or combination) is the right fit for them and their personal circumstances.

The post Passive income investors: Term deposits or ASX dividend stocks in 2026? appeared first on The Motley Fool Australia.

More reading

• 3 of the best ASX dividend shares to buy in June
• Historic: Here’s why CSL shares are looking very interesting right now
• Why are Telstra shares falling and should investors be concerned?
• 3 ASX financial shares to buy: experts
• Investors are celebrating yesterday’s inflation news. Here’s how it might impact ASX financial stocks

Motley Fool contributor Sebastian Bowen 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.

A new month means new investment opportunities. Here are four ASX 200 shares I think are good buys for June, and they’re all tipped to climb higher over the next 12 months. 

Virgin Australia Holdings Ltd (ASX: VGN)

The ASX 200 airline stock crashed in March as conflict in the Middle East and rising fuel prices put its shares under pressure. More recently, Virgin Australia recently told Webjet Group Ltd (ASX: WJL) that it will substantially reduce its commission streams and commercial arrangements from the 1st of July 2026. It also looks like investors are slowly rotating back into airlines and travel companies after fears around Middle East fuel disruptions have started to ease. The company also recently confirmed its FY26 guidance, which has helped gather more confidence from investors. I like the look of this ASX 200 travel stock, and analysts are also very bullish. Brokers rate the shares as a strong buy. They tip an upside of 45% to $3.72 over the next 12 months. 

Light & Wonder Inc (ASX: LNW)

The tech-based gaming company’s shares surged to an all-time high in January but then crashed 44% to a three-year low of $102.66 in early May after the company posted its first-quarter FY26 earnings results. The result was mixed, with a 2% increase in revenue and 5% increase in adjusted EBITDA. Meanwhile net income fell a huge 37%. Investors quickly sold up shares and while there has been a small rebound since, at the time of writing, sentiment hasn’t yet returned. Light & Wonder has been reshaping its business in recent years, focusing on recurring revenue and higher-quality earnings. If execution continues improving, it could continue to build value over the long term. Brokers are bullish and rate the ASX 200 shares as a strong buy. They expect a 77% upside to $198.50 over the next 12 months, at the time of writing.

Zip Co Ltd (ASX: ZIP)

Zip shares have been volatile this year after the stock was caught up in a sector-wide tech sell-off. Investors have also been taking their gains off the table after the stock rallied strongly last year. Technology and growth shares have also come under renewed pressure again recently as investors reassess valuations and risk appetite. The ASX 200 tech shares continued softening through May as investor sentiment struggled to rebound. But I think the stock is now oversold and trading far below fair value. Brokers rate the shares as a strong buy and tip a 72% upside to $3.83, at the time of writing.

Catalyst Metals Ltd (ASX: CYL)

Western Australian gold producer’s shares stormed higher earlier this year after it announced a significant new high-grade discovery at its Plutonic Gold Belt in January. The miner posted another positive drilling update earlier this month. The results included visibility of a potential mine life of more than 10 years at approximately 60,000 ounces per annum. The ASX 200 gold stock has been subject to a few ups and downs over the past couple of months. Although this was mostly in line with a fluctuating gold price. But it has shown a long period of operational consistency and organic growth. The miner expects production to increase towards the latter half of FY26 too. Analysts rate the stock as a strong buy and tip a maximum target price of $14.63. That implies a potential 169% upside at the time of writing.

The post 4 ASX 200 shares I’d buy with $5,000 in June appeared first on The Motley Fool Australia.

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• Virgin Australia, Qantas shares jump 8% higher this week. Are the ASX airline stocks a buy, sell or hold?

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Light & Wonder Inc. The Motley Fool Australia has recommended Light & Wonder Inc. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

June is almost here, and income investors may be looking for ASX dividend shares that can provide reliable income through different market conditions.

But which shares could be top buys?

Three that could be among the best for income investors to buy in June are named below. Here’s what you need to know about them:

APA Group (ASX: APA)

The first ASX dividend share to look at is APA Group.

It is one of Australia’s most important energy infrastructure businesses. Its network of gas pipelines, processing facilities, storage assets, and energy infrastructure helps move energy around the country.

This gives the company a very different profile from many traditional dividend shares. APA is not relying on shoppers spending more or miners enjoying high commodity prices. A large part of its business is linked to the need for reliable energy infrastructure.

That can make its cash flows more resilient than those of many cyclical companies. It also helps explain why APA has long been popular with income investors.

The market is forecasting a 5.7% dividend yield from APA Group shares in FY 2027.

Telstra Group Ltd (ASX: TLS)

Another ASX dividend share that could be a best buy is Telstra.

The telco giant has become a cleaner and more focused business in recent years. It still owns the country’s largest mobile network, and that remains a very powerful asset.

Mobile connectivity is not a discretionary luxury for most households or businesses. Phones, data, networks, and digital services are now essential parts of everyday life.

This gives Telstra an earnings base that can be more defensive than many other sectors. The company also has room to benefit from ongoing demand for mobile data, business connectivity, and network quality.

Brokers are expecting Telstra to pay a 21.5 cents per share fully franked dividend in FY 2027. This represents a forward dividend yield of 4.1%.

Transurban Group (ASX: TCL)

A third ASX dividend share to consider is Transurban.

Transurban owns and operates toll road assets in major cities across Australia and North America. These roads are difficult to replicate and often sit on critical transport corridors.

That matters because traffic volumes can recover over time as populations grow, cities expand, and commuters return to key routes. Toll increases linked to contracts or inflation can also support revenue growth.

The market expects this to underpin a 4.1% dividend yield in FY 2027.

The post 3 of the best ASX dividend shares to buy in June appeared first on The Motley Fool Australia.

More reading

• 3 ASX dividend shares raising dividends like clockwork
• Why are Telstra shares falling and should investors be concerned?
• 2 ASX dividend shares I’d buy for reliable passive income
• Why Telstra and these ASX dividend shares could be top buys for income
• Telstra shares fall 6% from a multi-year high: What happened, and is it time to sell up?

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Apa Group, Telstra Group, and Transurban Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Australian market has been turbulent through the first few months of 2026, suffering a series of crashes and surges. And many might be turning to the Oracle of Omaha, Warren Buffett, for advice on how to invest wisely and still come out ahead.

After all, Warren Buffett spent more than 60 years navigating crashes, recessions, and market volatility to become one of the world’s richest people. And all while also building Berkshire Hathaway into an investing powerhouse. 

He’s doing something right. And with his advice, many other investors could build their wealth too.

Over the years, Warren Buffett has shared several pieces of investing wisdom. But I think these are five of the most important rules when it comes to sharemarket investing.

1. Keep it simple

Warren Buffett isn’t a fan of complexity; instead, he has always recommended that investors keep it simple and straightforward.

That means using broad, low-cost index funds rather than investors trying to pick individual stocks. The funds give investors exposure to multiple companies at once. This diversity reduces the risk of significant losses from putting all your eggs into one basket. 

2. Stay calm

One of Warren Buffett’s most famous philosophies is to “be fearful when others are greedy and greedy when others are fearful”.

This means that investors should focus on the long term, rather than the latest news cycle. 

Ideally, investors should look to buy high-quality assets at a discount when other investors panic and sell, and pull back or sell when market overconfidence drives share prices to unrealistic heights.

3. Prepare, don’t predict

It’s not possible to reliably time the market. That’s because there are too many moving parts, and even the smartest investors can get it horribly wrong.

Instead of trying to predict how the market will act, Warren Buffett urges investors to be prepared. That means being patient, avoiding being caught up in the fear of missing out, and keeping some cash at hand so you have options if the share price of a business you like suddenly drops.

Taking a step back and focusing on preparing takes the edge off volatility. It lets investors differentiate between opportunities and catastrophes. 

4. Pick the business, not the stock

However the sharemarket is tracking, Warren Buffett says he will always look around at his options. And he’ll never pick a business that he doesn’t understand.

He once famously said in a letter to Berkshire Hathaway shareholders that “Charlie and I are not stock-pickers; we are business-pickers”. 

He sees ownership as a way to make a meaningful investment in businesses that look to have long-lasting, favourable economic characteristics and are run by trustworthy managers. 

The rule applies to investing when the market is storming higher, and also when it is turbulent. The problem is that, often, when a market shifts, investors start to panic and act irrationally. This is when we see low-quality shares bought at above-reasonable prices or good-quality stocks sold off out of fear. 

Rather than focusing on the share price, focus on the business itself.

5. Reinvest your dividends

According to Warren Buffett, you should always reinvest dividends if the company is growing and can generate high returns on that capital. 

Those extra shares you buy with dividends then start earning their own dividends. Over time, this compounds into much larger returns than if you’d taken the cash.

His logic is simply another way of letting your money make you even more money over time.

The post Want to invest like Warren Buffett? These 5 golden rules can help you build wealth fast appeared first on The Motley Fool Australia.

More reading

• Down 60%: 3 oversold ASX 200 shares to buy in June
• Average superannuation balance in 2026: 40 vs 50 and 60 years old Australians
• Here are the top 10 ASX 200 shares today
• Historic: Here’s why CSL shares are looking very interesting right now
• 5.4% dividend yield: Are Woodside shares a buy for income today?

Motley Fool contributor Samantha Menzies has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Berkshire Hathaway. The Motley Fool Australia has recommended Berkshire Hathaway. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The ASX 200 has been strong in parts, but not every share has enjoyed the ride.

In fact, some of the market’s highest-quality names have been sold down heavily over the past 12 months, potentially creating a buying opportunity for investors.

With that in mind, here are three oversold ASX 200 shares that could be in the buy zone in June:

Cochlear Ltd (ASX: COH)

The first ASX 200 share to look at is Cochlear.

The hearing solutions leader’s shares have fallen more than 60% over the past 12 months following a disappointing performance in FY 2026.

This is a big move for a company with a long history of innovation, global market leadership, and exposure to a large medical need. Cochlear’s products can make a meaningful difference to patients with severe hearing loss, and demand for hearing solutions should continue to grow as populations age.

For patient investors, this could be a chance to look again at a high-quality healthcare business after a major reset.

CSL Ltd (ASX: CSL)

Another ASX 200 share that looks oversold is CSL. The biotherapeutics giant has also fallen around 60% over the past 12 months, which is a remarkable decline for one of the ASX’s traditional blue-chip shares.

CSL has faced a difficult period as investors reassessed both its growth outlook and valuation. Weak earnings updates, restructuring plans, and softer medium-term guidance all weighed heavily on sentiment, particularly after management lowered expectations around growth in key areas such as flu vaccines and China albumin sales.

Despite these challenges, CSL’s core business remains exposed to important areas of healthcare, including immunology, haematology, vaccines, and iron deficiency. Healthcare demand is not driven by short-term consumer sentiment. That gives CSL a more defensive foundation than many cyclical businesses.

If management can restore confidence in the earnings outlook, this fallen giant could have plenty of recovery potential.

Xero Ltd (ASX: XRO)

A final ASX 200 share to consider is Xero. The cloud accounting software provider has fallen approximately 60% over the past 12 months, reflecting the broader pressure on software valuations.

Xero’s share price may be under pressure, but its platform remains deeply embedded in small business finance. Once customers connect invoicing, payroll, payments, bank feeds, reporting, and advisers to the platform, switching can be difficult.

The company also has room to keep expanding its role beyond accounting, helping small businesses manage more of their financial operations.

The road back may not be smooth. But after such a heavy fall, Xero could be a top ASX 200 recovery idea for June.

The post Down 60%: 3 oversold ASX 200 shares to buy in June appeared first on The Motley Fool Australia.

More reading

• Historic: Here’s why CSL shares are looking very interesting right now
• These 3 ASX healthcare stocks have been crushed in 2026. They could be set for a comeback
• Should I buy CSL shares in June?
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Motley Fool contributor James Mickleboro has positions in CSL, Cochlear, and Xero. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL, Cochlear, and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool Australia has recommended CSL and Cochlear. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Are you looking forward to living a comfortable retirement lifestyle but are concerned about whether or not you’re on track?

Or perhaps you want to find out the superannuation balance you’d need to maintain a good standard of living, do some regular activities, meals out, and perhaps even an occasional overseas trip.

Here’s a rundown of the average super balance for Australians at age 40, versus age 50 and age 60 in 2026, and what you’d need at each age to have enough for retirement. 

How much superannuation does the average Australian have at age 40?

There isn’t an exact figure for Australians at each age, but the Association of Superannuation Funds of Australia (ASFA) provides some brackets that can help.

According to ASFA, at age 40-44, the average male has $140,680, and the average female has $109,209. 

How much superannuation does the average Australian have at age 50?

The data also shows that, at age 50-54 years old, the average male has $254,071, and the average female has $190,175.

How much superannuation does the average Australian have at age 60?

The average 60 to 64-year-old Australian male has an average superannuation balance of $395,852, and women have around $313,360.

40 vs 50 and 60: Why is the gap so wide?

The difference between super balances at age 40 versus age 50 and then age 60 is significant.  

Over the 20-year period between age 40 and 60, average balances increase by over $200,000 for both men and women.

It could be that these individuals have had more time to add additional contributions to their superannuation balance. 

But it also shows the importance of compounding. It’s clear that accumulating wealth early on, investing in a well-performing fund, and at a risk profile that suits your own, can supercharge your balance down the line.

Are these average balances enough to retire on?

No. In fact, the average Australian is quite far behind.

A comfortable retirement is expected to cost around $54,840 per year for individuals and $77,375 per year for couples.

To afford that, by retirement, a single person will need a superannuation balance of around $630,000, and couples need around $730,000.

Using ASFA’s Super Balance Detective tool, I’ve calculated what you’d need at ages 40, 50, and 60 to reach that sum.

At age 40, you need around $178,000 in your superannuation.

At age 50, this should be more like $313,500.

Then, at age 60, you should have around $496,500 in order to live comfortably when the time comes. 

As you’ll see. These sums are significantly higher than the average at each age milestone.

And this means you’ll need to bridge the gap another way.

Additional contributions are a good place to start. You can take advantage of additional concessional or non-concessional contributions, whether this is salary sacrificing or after-tax payments (within your annual limits).

Applicable government initiatives could also help bridge the gap between the superannuation balance you have and what you need. 

The post Average superannuation balance in 2026: 40 vs 50 and 60 years old Australians appeared first on The Motley Fool Australia.

More reading

• Here are the top 10 ASX 200 shares today
• Historic: Here’s why CSL shares are looking very interesting right now
• 5.4% dividend yield: Are Woodside shares a buy for income today?
• 5 steps to bring in $1,000 per month in passive income
• 5 ASX shares set to soar 40% to 80% in 12 months: experts

Motley Fool contributor Samantha Menzies 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.

The S&P/ASX 200 Index (ASX: XJO) enjoyed a very pleasant end to the trading week indeed this Friday. After yesterday’s nasty drop, investors seemed keen to turn over a new leaf before the end of the week. The ASX 200 opened sharply higher and stayed in green territory all session. The index ended up closing with a healthy 1.62% gain, leaving it at 8,731.7 points as we head into the weekend.

This happy Friday for the ASX comes after a more measured night of trading on the American markets.

The Dow Jones Industrial Average Index (DJX: .DJI) had a nervous session, finishing with a tentative 0.049% rise.

The tech-heavy Nasdaq Composite Index (NASDAQ: .IXIC) was more decisive, though, rising a solid 0.91%.

But let’s return to the local markets now and check out how today’s terrific trading conditions spilled over into the different ASX sectors.

Winners and losers

The post Here are the top 10 ASX 200 shares today appeared first on The Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen 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 Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

As anyone who owns CSL Ltd (ASX: CSL) shares would be painfully aware, it has been a brutal few weeks to own this ASX 200 healthcare stock, and former market darling.

Back on 11 May, CSL lost almost 16% of its value in one session after reporting that it is expecting even lower revenues and profits than it had previously flagged for FY2026.

Investors responded by giving the company its worst one-day session in history. Of course, CSL was already on the nose with investors. Far from its halcyon days of over $340 a share in early 2020, the company lost more than half of its valuation between August 2025 and May 2026. And that was before that one-day car crash.

This has been devastating for many CSL investors, especially for those who have held on for years. The company today is at a price it first reached more than ten years ago. And it’s not like CSL has paid out a lot in dividends over that time to make up for the loss of shareholder capital.

But now we are on the subject of dividends, let’s dive in a little deeper, for something very interesting is happening on the CSL income front.

What’s happening with the dividend on CSL shares?

As any good dividend investor knows, a company’s dividend yield is the function of two metrics. The first is the raw dividends per share that a company declares and pays out. But that alone doesn’t determine a company’s dividend yield. It is also influenced by its share price. A company can increase its dividends every single year. Yet if its share price rises at an even faster rate, its running yield will fall. The opposite is also true, though, which brings us to CSL.

On the first factor, CSL remains a winner. The company has been growing its annual payouts for more than a decade. Its final dividend last year was the largest it has ever funded (in US dollar terms), coming in at US$1.62 per share. The interim dividend that investors bagged last month was tied for its largest interim payout, matching last year’s US$1.30 per share.

If we combine this with the fact that CSL shares are at a ten-year low, it may come as no surprise to see that its yield is currently at a record high. For much of CSL’s recent history, investors would be lucky to see the company trade on a yield above 1%. Today, it is sitting at 3.08% (at the time of writing), ahead of Commonwealth Bank of Australia (ASX: CBA), if you can believe it.

Of course, just because CSL is trading with an historically high dividend yield doesn’t mean it’s a screaming buy. If CSL’s profits are sagging, the company might be forced to cut its payouts next year. This, as we’ve already discussed, would naturally bring the company’s yield back down. Even so, it’s a very interesting development to see this company hit a 3% dividend yield. Let’s see what happens next.

The post Historic: Here’s why CSL shares are looking very interesting right now appeared first on The Motley Fool Australia.

More reading

• These 3 ASX healthcare stocks have been crushed in 2026. They could be set for a comeback
• 3 ASX financial shares to buy: experts
• Should I buy CSL shares in June?
• After CSL’s 60% share price crash, insiders are starting to buy
• Investors are celebrating yesterday’s inflation news. Here’s how it might impact ASX financial stocks

Motley Fool contributor Sebastian Bowen has positions in CSL. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended CSL. The Motley Fool Australia has recommended CSL. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Looking at Woodside Energy Group Ltd (ASX: WDS) shares today, one metric might catch your eye. That would be this ASX 200 energy stock‘s rather large dividend yield.

As it currently stands, this Friday (at the time of writing anyway), Woodside shares are going for $30.30 each, down a nasty 1.13% for the day so far.

At this share price, Woodside would appear to be trading on a trailing dividend yield of 5.45%.

That’s large by any standards. But when you consider that most other blue-chip ASX dividend shares don’t have nearly anything of that size to offer up to income investors, it is of particular note. To illustrate, the closest rival to Woodside’s yield from the big four ASX banks, traditionally some of the ASX’s most formidable dividend payers, is currently ANZ Group Holdings Ltd (ASX: ANZ). It’s offering up a yield of just over 4.7% right now.

Commonwealth Bank of Australia (ASX: CBA) isn’t even in the same league, with its 3%-ish yield. Other blue chips, including Telstra Group Ltd (ASX: TLS), Coles Group Ltd (ASX: COL), and Wesfarmers Ltd (ASX: WES), are in a similar boat.

So should income investors prioritise loading up on Woodside shares if they are seeking to maximise their dividend income in 2026?

Are Woodside shares a screaming buy for that 5% yield?

Well, there’s nothing wrong with Woodside’s 5% yield itself. It hails from the last two dividend payments that the company dished out to investors. The first was the interim dividend from August, worth 81.82 cents per share; the second was the 83.49 cents per share interim dividend from March. Both payments came with full franking credits attached, as is Woodside’s habit.

Together, that 12-month total of $1.65 per share in dividends gives Woodside shares that 5.45% yield at the current stock price.

However, this merely reflects what Woodside has already paid out, not what it will pay out to investors who buy shares today.

Unfortunately, there’s no way to predict even the most reliable dividend stock’s payouts before the company reveals what they will be. Woodside is particularly unreliable given the highly cyclical nature of energy companies’ earnings. The reality is that the single largest factor determining Woodside’s future dividends will be the global price of oil. That is going up and down like a yo-yo at the moment, depending on the latest developments out of the Middle East. If oil prices do stay elevated, it obviously bodes well for the Woodside dividend.

However, the opposite could also be true. Earlier this week, my Fool colleague Bronwyn reported on the views of an ASX expert. He argued this:

Given Middle East tensions are expected to ease over time, energy prices could soften and reduce earnings support.

The stock now appears fully valued. In response to share price gains, it makes sense to lock in profits and re-allocate the proceeds to opportunities with stronger growth outlooks.

At the end of the day, Woodside is a relatively unreliable income provider. It certainly has the potential to gush cash when factors outside its control work in its favour. I think it has a place as a part of a well-diversified income portfolio. But investors may want to think twice before putting all of their eggs in Woodside shares’ basket.

The post 5.4% dividend yield: Are Woodside shares a buy for income today? appeared first on The Motley Fool Australia.

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

Generating $1,000 per month in passive income from ASX shares is a big target, but it is possible.

At an average dividend yield of 5%, an investor would need around $240,000 invested to generate $12,000 a year in dividends. That works out to $1,000 a month, before tax and before considering franking credits.

Getting there takes time, but I think there are five steps that can make the journey realistic.

Start with sustainable dividends

The first step is to focus on dividends that can last.

A high dividend yield can look attractive, but it is not always a good sign. Sometimes the yield is high because the share price has fallen and the market expects the dividend to be cut.

I would rather look for ASX shares with solid earnings, sensible payout ratios, manageable debt, and businesses that should still be relevant in five or 10 years.

That could include shares such as Wesfarmers Ltd (ASX: WES), which has a long record of owning strong businesses and returning cash to shareholders. Dicker Data Ltd (ASX: DDR) could be another option for investors who want exposure to technology distribution and income.

The key is not just the dividend today. It is whether the company can keep supporting and growing that dividend over time.

Spread the risk

The second step is diversification.

Relying on one or two dividend shares can be risky. Even good businesses can have difficult years. A dividend cut from a major holding can quickly reduce passive income.

That is why I would spread money across different types of dividend shares.

An investor could also consider an exchange-traded fund (ETF) such as the Vanguard Australian Shares High Yield ETF (ASX: VHY) or the Betashares S&P Australian Shares High Yield ETF (ASX: HYLD). They provide exposure to a basket of higher-yielding Australian shares, which can make diversification easier than picking every stock individually.

Pay attention to franking

The third step is to think about franking credits.

Many Australian companies pay fully franked dividends, which means tax has already been paid at the company level. For some investors, franking credits can improve the after-tax income received.

That does not mean investors should buy a share only because it is fully franked. The business still needs to be strong enough to support the dividend.

But when comparing two similar income options, franking can make a meaningful difference.

Reinvest before withdrawing

The fourth step is patience. If the goal is to eventually generate $1,000 per month, I would reinvest dividends while the income stream is still being built.

Reinvesting dividends allows investors to buy more shares, which can increase future income. It can feel slow at first, but over time the compounding effect can become powerful.

The longer an investor can leave the income machine to grow before drawing from it, the better the eventual passive income stream could be.

Keep reviewing the plan

The final step is to review the holdings regularly.

That does not mean trading constantly. But it does mean checking whether the original reason for owning each share still makes sense.

If earnings weaken, debt rises, or the dividend starts looking stretched, it may be time to reconsider. Passive income investing still needs active attention from time to time.

Foolish takeaway

A $1,000 monthly passive income stream is not built by chasing the highest dividend yield on the market.

I think the better approach is to build gradually, focus on dividend quality, reinvest along the way, and let the income base grow over time.

Once the portfolio reaches around $240,000 and can produce an average yield of 5%, that $12,000 annual target becomes achievable. The real challenge is having the patience to build it properly.

The post 5 steps to bring in $1,000 per month in passive income appeared first on The Motley Fool Australia.

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Motley Fool contributor Grace Alvino has positions in Wesfarmers. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Wesfarmers. The Motley Fool Australia has positions in and has recommended Dicker Data. The Motley Fool Australia has recommended Vanguard Australian Shares High Yield ETF and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.