Category: Stock Market

The good news for growth investors is that there are plenty of ASX growth shares to choose from on the Australian share market.

Two that analysts at Morgans are particularly positive on are named below. Here’s why the broker has them on its best ideas list this month:

Corporate Travel Management Ltd (ASX: CTD)

Morgans is feeling very bullish on this ASX growth share right now.

Its analysts highlight that the corporate travel specialist is a key pick in the travel sector and see plenty of upside for its shares. Particularly given recent acquisitions, cost reductions, and its market-leading technology. The broker explains:

Taking a longer term view, CTD remains as a key pick for the travel sector. We see substantial upside in its share price as the company recovers from the COVID affected travel downturn. In fact, CTD should be a materially larger business post COVID given it has made two highly accretive acquisitions during the downturn. The company has also won a lot of new business, implemented structural cost out opportunities and continued to develop its market leading technology offering which means that it will require less staff in the future. CTD is well managed and has a strong balance sheet (no debt).

Morgans has the company’s shares on its best ideas list with an add rating and $21.90 price target.

Universal Store Holdings Ltd (ASX: UNI)

Another ASX growth share that Morgans says investors should buy is this youth fashion retailer.

The broker is very positive on the company due to its store expansion and online penetration opportunities. It also likes Universal Store’s exposure to younger consumers in the current economic environment. It commented:

Universal Store (UNI) is one of the largest and fastest growing fashion retailers in Australia. Through a national network of over 100 stores and a successful online platform, UNI curates a diverse range of men’s and women’s fashion, shoes and accessories from local and international brands as well as its own private labels. UNI’s stores trade under the Universal Store, Perfect Stranger and THRILLS banners. UNI has opportunities to grow steadily through the rollout of bricks and mortar stores, increased digital penetration and expansion of wholesale channels. While we recognise the general risk around a decline in consumer expenditure on discretionary categories like apparel, we highlight that the youth demographic is likely to be more resilient.

Morgans has an add rating and $6.85 price target on the company’s shares.

The post Buy these ASX growth shares while they’re still cheap: Morgans appeared first on The Motley Fool Australia.

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More reading

• 2 ASX 200 shares that could be top buys for growth
• Buy these ASX dividend shares for a big passive income boost: Goldman Sachs
• How I’d invest $20,000 to earn reliable passive income today
• Boost your passive income with these ASX dividend shares: analysts
• Bargain or value trap? Fundie rates 3 ASX 200 shares going for cheap

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 Jumbo Interactive. The Motley Fool Australia has recommended Corporate Travel Management and Jumbo Interactive. 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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Imagine an S&P/ASX 200 Index (ASX: XJO) stock that pays out a 7% dividend yield with decades of reliable revenue to come.

Well, such a stock does exist, but is poorly understood by Australian investors.

Deterra Royalties Ltd (ASX: DRR) is a company that owns royalty rights for mining assets. The best way to describe it might be that it’s the landlord of the mine, while the mining companies are tenants.

Royalty stocks are fairly common in Canada, which has a resource-rich economy similar to Australia.

But here it is rarely seen.

A ‘misunderstood’ gem pumping out the dividends

So why is Deterra Royalties such a tempting dividend buy?

In February, TMS Capital portfolio manager Ben Clark explained why it’s one of the five ASX 200 shares he would buy if he was starting a portfolio from scratch.

“What Deterra has is globally unique,” he said.

“Deterra owns a 1.232% royalty over the MAC [Mining Area C], which about two-thirds of BHP Group Ltd (ASX: BHP)’s total iron ore production comes out of.”

The clincher is that, unlike most royalty companies, Deterra’s revenue comes from BHP’s revenue made from the mine, rather than profit.

That means that even if iron ore is going through a cyclically low time, Deterra will still make money.

Clark noted the MAC mine has an estimated 60-year life. Not only that, BHP is ramping up production over the coming years.

“It’s an incredibly interesting business. But I still think it’s misunderstood.”

If you add up franking credits, the dividend yield this year will end up around 11% to 12%, he added.

All this positive energy could mean that it might not last for long on the ASX.

“It’s got net cash on the balance sheet, and I think at some stage, one of those big resource players will come sniffing for it.”

The Deterra Royalties share price is 5.9% higher so far this year.

The post <strong>Why I won’t ignore the chance to buy this top high-yield ASX 200 dividend share in 2023</strong> appeared first on The Motley Fool Australia.

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More reading

• Here are the top 10 ASX 200 shares today

Motley Fool contributor Tony Yoo 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.

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The South32 Ltd (ASX: S32) share price is having a strong session.

At the time of writing, the mining giant’s shares are up 3% to $4.40.

Why is the South32 share price charging higher?

Investors have been scrambling to buy the miner’s shares today after it was the subject of a bullish broker note out of Goldman Sachs.

According to the note, the broker has upgraded South32’s shares to a buy rating with a $4.90 price target.

Based on the current South32 share price, this implies potential upside of 11.3% over the next 12 months.

In addition, Goldman is expecting South32 to pay a monster 40 US cents (A$0.60) per share dividend in FY 2024.

This is significantly greater than consensus estimates and equates to a whopping 13.5% dividend yield at current levels.

What did the broker say?

Goldman made the move partly on valuation and yield grounds. It commented:

We upgrade S32 to Buy (from Neutral) on attractive valuation: Trading at ~0.95xNAV (A$4.6/sh) and on an implied TSR of ~29%, and an attractive NTM EV/EBITDA multiple of ~2.1x vs. the sector average of 4.5x.

We assume the share buyback continues (at ~US$250mn p.a) and S32 pays out 50% of earnings (40% ordinary, 10% special dividend component) with the FY23 full year result. On our estimates, S32 is on a supportive dividend yield of c. 5% in FY23, increasing to 14% in FY24.

In addition, the broker highlights the miner’s “improving FCF outlook on higher production & commodity prices (base metals and met coal).”

All in all, its analysts believe that this could be one of the best ASX 200 mining shares to buy right now, especially if you’re an income investor.

The post South32 share price jumps on Goldman Sachs upgrade: broker tips monster yield appeared first on The Motley Fool Australia.

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More reading

• ‘Attractive value’: 2 ASX 200 mining shares ‘worth adding’ right now
• 5 things to watch on the ASX 200 on Wednesday
• Analysts name 2 high yield ASX dividend shares to buy today
• The slimmer South32 dividend is being shelled out today. Here’s the lowdown
• 5 things to watch on the ASX 200 on Thursday

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 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.

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ASX cannabis share Althea Group Holdings Ltd (ASX: AGH) leapt by as much as 27% this morning after the company revealed record quarterly sales of $9.24 million.

The company also achieved its maiden monthly operating profit in March, and now expects its first quarter of profit in June.

Althea manufactures, sells, and distributes cannabis-based medicines and recreational products globally.

Shares in Althea are currently changing hands for 5.1 cents, 13.3% up on yesterday’s close of 4.5 cents.

In earlier trading, they hit an intraday high of 5.7 cents, up 26.6%.

Let’s look at the detail in the report.

Althea share price soars on 68% increase in sales

The company reported the following results for the three months to 31 March:

• $9.24 million in cash receipts, up 68% on the prior corresponding period (pcp)
• Net cash outflows of $1.63 million, down 24% pcp
• Cash and cash equivalents of $5.3 million as of 31 March

What happened to this ASX cannabis share in March?

Althea has two business divisions — recreational cannabis and pharmaceutical cannabis.

The company reported a record $5.15 million in receipts for recreational cannabis during the March quarter, up 57% compared to the December 2022 quarter.

It also reported a record $3.75 million in receipts for medicinal cannabis, up 11% on December.

Althea recorded its maiden monthly operating profit in the month of March.

The ASX cannabis share is flying today on this news and may get a further boost if the company makes good on its expectations of a maiden quarterly profit in June.

Althea also said operating expenses fell during the March quarter as a result of cost-cutting programs.

In other news during the quarter, Althea announced it had secured a CAD$2 million loan facility from lenders in Canada.

In addition, the company announced a further $2.2 million of convertible debt funding. This was provided by an institutional investor in the United States.

The ASX cannabis share fell by 16.7% between 1 January and 31 March.

The S&P/ASX All Ordinaries Index (ASX: XAO) rose by 2.1% over the same time frame.

‘A landmark turning point’ says CEO

Althea CEO Joshua Fegan said:

March 2023 was a landmark turning point for the Company as we achieved record monthly cash receipts and a maiden monthly operating profit.

To close out the Quarter with such a strong month (March) sets us up well for an expected substantial improvement in cash flow position, and a quarterly operating profit, for the final quarter of FY23.

The post Which ASX cannabis share is surging 27% on record quarterly results? appeared first on The Motley Fool Australia.

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More reading

• Why I won’t ignore the chance to buy this top high-yield ASX 200 dividend share in 2023
• South32 share price jumps on Goldman Sachs upgrade: broker tips monster yield
• ASX 200 tech share NextDC just rocketed 9%. Here’s why
• How to build a passive income for life with just $7 a day
• Could Westpac shares have ‘the greatest potential’ of all the ASX 200 bank stocks?

Motley Fool contributor Bronwyn Allen has positions in Althea 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 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.

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S&P/ASX 200 Index (ASX: XJO) tech share Nextdc Ltd (ASX: NXT) is off to the races today.

Shares in the Australian data centre developer and operator closed yesterday trading for $11.12. Shares are currently changing hands for $12.17 apiece, up 9.4% in midday trading.

The ASX 200 is also in the green today, up a more modest 0.58%.

Here’s what’s driving investor in the blue-chip tech company on Wednesday.

Why is the ASX 200 tech share leaping higher?

The NextDC share price is surging after the company updated the market on its data centre utilisation capacity.

NextDC reported that in the wake of recent customer wins, its contracted utilisation has increased by 43%, or 35.9 megawatts (MW), to 120MW since 31 December.

The company’s new S3 data centre has been the biggest beneficiary of the new customer contracts, having now reached 46% of its total planned capacity.

Commenting to the customer wins driving the ASX 200 tech share higher today, NextDC CEO Craig Scroggie said, “It is very pleasing for the company to have secured this record level of incremental customer contract wins.”

Looking ahead, Scroggie added:

Having done significant work over recent years to deliver UI certified Tier IV metropolitan hyperscale data centres in S3, M2 and M3, the company is very well positioned to continue to take advantage of further customer growth across these critical digital infrastructure assets.

NextDC noted that it expects to progressively recognise revenue from most of the new customer contract wins from late FY24 through FY29. This will follow on the completion and commissioning of additional data halls over the coming years.

The ASX 200 tech share has already secured expansion land in the Macquarie Park availability zone for S5 Sydney. Subject to development approval, NextDC expects S5 will accommodate target IT capacity of 60MW+ once it’s constructed.

NextDC share price snapshot

As you can see in the chart below, the NextDC share price has been a stellar performer in 2023, up 32%. The ASX 200 tech share is up 9% over the past 12 months.

The post <strong>ASX 200 tech share NextDC just rocketed 9%. Here’s why</strong> appeared first on The Motley Fool Australia.

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More reading

• The broker community’s 3 best ASX 200 shares to buy for 2023
• These are the best ASX sectors to invest your money into this quarter: Morgans
• Morgans names 3 more of the best ASX 200 shares to buy in April
• Top brokers name 3 ASX shares to buy next week
• Here are the 10 most shorted ASX shares this week

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 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.

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Are you looking for some ASX dividend shares to buy for your income portfolio? If you are, then the two listed below could be worth considering.

Both have been named as buys and tipped to provide investors with good yields. Here’s what you need to know about them:

Charter Hall Long WALE REIT (ASX: CLW)

The first ASX dividend share that has been named as a buy is Charter Hall Long Wale REIT.

It is a property company focused on high quality assets that are leased to corporate and government tenants on very long leases. This includes industrial properties (such as supermarket distribution centres), telco exchanges, and agri-logistic properties.

The team at Citi is positive on company, highlighting its “low risk income stream with c. 12 year WALE and 99.9% occupancy.”

It expects this to support dividends per share of 28 cents in FY 2023 and 29 cents in FY 2024. Based on the current Charter Hall Long Wale REIT share price of $4.25, this will mean yields of 6.6% and 6.85%, respectively.

Citi currently has a buy rating and $5.00 price target on its shares.

National Australia Bank Ltd (ASX: NAB)

Another ASX dividend share that has been named as a buy is big four bank, NAB.

The team at Goldman Sachs is feeling very positive on the bank in the current environment. This is due to its exposure to commercial lending. The broker highlights that it sees “volume momentum over the next 12 months as favouring commercial volumes over housing volumes.”

This is good news for NAB, as Goldman believes it “provides the best exposure to this thematic.”

In respect to dividends, Goldman is expecting this to underpin fully franked dividends of $1.73 per share in FY 2023 and $1.76 per share in FY 2024. Based on the current NAB share price of $28.26, this implies yields of 6.1% and 6.2%, respectively.

Goldman Sachs has a buy rating and $35.42 price target on its shares.

The post Buy NAB and this ASX dividend share now: analysts appeared first on The Motley Fool Australia.

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More reading

• It’s official, the ASX 200 big four banks are the world’s most capitalised. Should you buy?
• Analysts reckon you should add these ASX dividend shares to your retirement portfolio
• Mortgage competition has never been hotter, so are NAB shares worth buying right now?
• How much do you need to invest to give up work and live only off dividend income?
• Could right now be a great time to buy ASX 200 bank stocks for passive income?

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 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.

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S&P/ASX 200 Index (ASX: XJO) dividend shares are back on centre stage.

With bank deposit rates failing to keep up with inflation, more investors are turning to ASX 200 shares to secure valuable passive income streams.

But not all income stocks are created equal.

So, here are three handy tips to squeeze the most passive income from ASX 200 shares.

Steer clear of this trap

The first tip we’ll cover is a type of dividend share to do your best to avoid.

This is a company that’s quoting an attractively high trailing dividend yield, but one that is unlikely to be able to sustain that yield moving forward.

You may have heard these called dividend traps, or value traps.

Investors can stumble into these traps on several fronts.

First, an ASX 200 company may have seen its share price halve in value since its last dividend payout. This could happen due to a variety of company-specific, broader market-related, or legal reasons.

When the share price is halved, the trailing yield is doubled. While that looks good on paper, there’s a very good chance the upcoming dividend payouts will be significantly reduced.

Ideally, you want to invest in an income stock that’s been growing its market share and profits, and increasing its dividends consistently over the past several years.

Second, some ASX 200 shares operate in highly cyclical sectors, like resources. When the price of those resources is high, so are the profits and resulting dividend payouts.

These are good passive income stocks to hold during the rising part of the resource cycle. But you’ll likely find the dividends falling along with the price of those resources as the cycle enters its downturn.

ASX 200 shares with tax benefits

The second handy tip to get the most passive income from your investments is to focus on ASX 200 shares with fully franked dividends.

Australia is fairly unique in that investors receive credit for any taxes a company has already paid on its profits when it comes to dividend payouts.

That means if a company has paid its full 30% corporate tax rate down under, its dividends will be 100% franked. Come tax time, to avoid double taxation, that in turn means the investor won’t be liable for that part of the tax burden.

If your personal tax rate is less than 30%, you should even be eligible for a rebate on the difference.

But regardless of your personal tax rate, fully franked dividends will help you squeeze the most passive income from your ASX 200 shareholdings.

Reinvest and compound

Which brings us to our third handy tip to get the most passive income from your ASX 200 shares.

The dividend reinvestment plan (DRP).

Not all companies offer these. But it’s worth favouring those who do, so long as you don’t require access to your passive income payments straight away.

Participating in a company’s DRP is voluntary. And you can opt to fully or partly reinvest your dividend payment.

Opting for the DRP has several advantages.

First, you won’t have to pay any trading fees or transaction costs.

Second, you put the power of compounding to work for you. Meaning you’ll now be earning a yield on those reinvested dividends.

Over time, the power of that compounding can help you get a lot more passive income from your ASX 200 shares than you may have thought possible.

The post 3 handy tips to squeeze the most passive income from ASX 200 shares appeared first on The Motley Fool Australia.

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More reading

• Buy NAB and this ASX dividend share now: analysts
• Buy Rio Tinto shares ahead of BHP: Goldman Sachs
• Whitehaven share price tanks 7% on downgraded FY23 guidance
• Need passive income? Turn $6,000 into $100 every month
• Pilbara Minerals is one of the cheapest shares in the ASX 200. Am I buying?

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 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.

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When it comes to the mining sector, there are two ASX mining shares that stand head and shoulders above the rest.

These are of course BHP Group Ltd (ASX: BHP) and Rio Tinto Ltd (ASX: RIO).

Collectively, these mining giants are bigger than the big four banks combined and distribute tens of billions of dollars in dividends each year.

But if you could only buy one of these ASX mining shares, which one would it be?

Well, according to analysts at Goldman Sachs, Rio Tinto shares are the ones to buy ahead of BHP right now.

Buy Rio Tinto shares ahead of BHP

According to the note, the broker has reiterated its conviction buy rating on Rio Tinto shares with a price target of $138.30.

Based on the current Rio Tinto share price of $121.66, this implies potential upside of almost 14% for investors over the next 12 months.

And with Goldman expecting a 7% fully franked dividend yield over the next 12 months, the total return stretches to approximately 21%.

As a comparison, the broker has retained its neutral rating and $50.40 price target on BHP’s shares.

Why Rio Tinto?

Goldman has a preference for Rio Tinto shares over BHP due to its valuation, free cash flow generation, and production growth outlook. It explained:

We prefer RIO over BHP on valuation & FCF and an expected operational turnaround in the Pilbara and copper (Oyu Tolgoi) driving higher Cu Eq growth over the next 2-years.

The broker is also expecting a strong quarterly update from Rio Tinto later this month, whereas it suspects that “weak results” could be coming from BHP. It adds:

Positive results from: RIO with Pilbara shipment data indicating a 13% YoY increase in Pilbara iron ore shipments to ~80Mt (see Exhibit 11) putting RIO well on track to hit the top end of the 320-335Mt guidance range for 2023 when seasonally adjusting for wet weather in 1H. […] Weak results from: BHP with lower YoY iron ore (safety, maintenance, port debottlenecking tie-in impacts) and met coal shipments (wet weather) and an expected decline in copper production from Spence in Chile due to plant tie-ins.

The post Buy Rio Tinto shares ahead of BHP: Goldman Sachs appeared first on The Motley Fool Australia.

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More reading

• 5 things to watch on the ASX 200 on Wednesday
• If I buy BHP shares now, what could my return be in a year’s time?
• The BHP share price is taking off today. Could this be why?
• Buy these ASX dividend shares for a big passive income boost: Goldman Sachs
• How to start building a lifelong passive income with just $5 a day: Tips and Tricks

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 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.

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The Whitehaven Coal Ltd (ASX: WHC) share price is tumbling this morning after the ASX coal miner downgraded its full-year guidance for FY23.

The Whitehaven share price dropped to $6.44 in early trading, a fall of 7.3% on yesterday’s closing price.

Labour shortages and bad weather have caused delays in production, resulting in a downgraded forecast for production and sales and increased unit costs for the full-year FY23.

Whitehaven previously expected managed run-of-mine (ROM) coal production of 19Mt to 20.4 Mt across its three key assets at Maules Creek, Narrabri, and Gunnedah.

The company is now guiding full-year production of 18Mt to 19.2Mt instead.

The coal miner previously guided managed coal sales of 16.5Mt to 18Mt but is now guiding 15.3Mt to 16Mt. It previously guided equity coal sales of 13.1Mt to 14.4Mt but is now expecting 12.3Mt to 12.9Mt.

Whitehaven has also revised its unit cost of coal (excluding royalties) expectations upward from a range of $95 to $102 per tonne to a range of $100 to $107 per tonne.

Why has Whitehaven downgraded its FY23 guidance?

In a statement, Whitehaven said production during the March quarter came in “below plan” at 4.3Mt.

The company said:

Labour shortages are being felt across the business, but the impact of several additional operational constraints at Maules Creek meant its production increased by only 9% relative to the December quarter.

This lower than planned increase reflects labour constraints, congestion arising from limited dumping locations while keeping manned and unmanned fleets separate, and intermittent weather interruptions in the month of March.

What’s next?

The company said overall production should get better in the June quarter. However, the problems at Maules Creek have pushed its overall forecasts below the bottom end of the previous guidance.

Lower production in the second half of FY23 “will result in some sales volumes being pushed into FY2024”, the company said.

During the March quarter, Whitehaven achieved an average coal price of about $400 per tonne.

On 31 March, its net cash position was $2.7 billion. It generated about $1.2 billion in cash from operations during the quarter.

Whitehaven Coal will release its official March quarter production report next Friday 21 April.

Whitehaven Coal share price snapshot

The Whitehaven Coal share price has been smashed in 2023. It is currently down 26% in the year to date.

Whitehaven shares shot the lights out in 2022, rising by more than 260% over the 12 months to 31 December due to booming commodity prices.

The post Whitehaven share price tanks 7% on downgraded FY23 guidance appeared first on The Motley Fool Australia.

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More reading

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• 7 ASX dividend shares you can buy for under $10
• BHP share price dips as coal mines catch attention
• One of the most beaten-up ASX 200 shares of 2023 so far. Is it time to buy?
• Here are the top 10 ASX 200 shares today

Motley Fool contributor Bronwyn Allen 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.

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There are a lot of options out there for readers that are wanting to generate passive income.

But when it comes to generating true passive income, the kind that is both sizeable and reliable, there’s simply no substitute for the power of compounding.

With compounding, you’re not just aiming to see growth today or tomorrow, or even a few years down the road. Rather, you’re looking at the bigger picture, with an eye towards where your investments might take you over the course of several decades.

The good news is that there are plenty of ASX shares that provide investors with regular income and have bright long-term growth prospects.

By investing a relatively modest $6,000 across these types of shares, investors could be generating decent income in time.

Income from ASX shares

Firstly, when it comes to which ASX shares to buy, you might want to channel your inner-Warren Buffett.

He looks for companies with fair valuations, strong business models, and competitive advantages. And given his investment track record at Berkshire Hathaway (NYSE: BRK.B), it would be hard to argue against this approach.

Once you have built your $6,000 ASX share investment portfolio, you can sit tight and let the magic of compounding do its thing.

Over the last 30 years, the Australian share market has generated an average annual return of 9.6%. And while there’s no guarantee that it will do the same in the future, we’re going to assume that it does for this exercise.

If your portfolio generated this return, in 15 years it would have grown to be worth approximately $24,000. That’s without lifting a finger or adding any extra funds.

Once you have reached that figure, if you can rebalance your portfolio so that it has a collection of dividend shares that average 5% yields, you will be earning $1,200 of passive income each year. This is enough to give you a monthly pay check of $100.

Want more?

If you want even more passive income, you have the option of adding to your portfolio each year.

Here’s a quick summary of how different annual contributions would impact the value of your portfolio at year 15:

• $1,000 a year = $57,500 and $2,900 of passive income
• $2,000 a year = $91,200 and $4,600 of passive income
• $3,000 a year = $125,000 and $6,250 of passive income
• $5,000 a year = $192,000 and $9,600 of passive income

As you can see, making annual contributions brings compounding to life and can give your portfolio (and passive income) a huge boost. Food for thought!

The post Need passive income? Turn $6,000 into $100 every month appeared first on The Motley Fool Australia.

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More reading

• Warren Buffett is doubling down on these Japanese stocks. How can ASX investors do the same?
• How to invest $300 a month using the Warren Buffett method
• How to start building a lifelong passive income with just $5 a day: Tips and Tricks
• How ASX investors can build a $1 million portfolio in 12 years
• I’d listen to Warren Buffett to grow my wealth with ASX shares

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 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.

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