Category: Stock Market

Building a $1 million share portfolio can sound like a goal reserved for people starting with a lot of money.

But time and consistency can change the picture considerably.

If I were aiming for that target over the next 20 years, this is how I would approach it.

Start with $20,000 and keep adding

Let’s assume I begin with a $20,000 ASX share portfolio and invest another $1,500 each month.

That works out to $18,000 of new money every year.

If the portfolio produces an average return of around 9% per annum, those contributions could grow to approximately $1 million over 20 years.

I should point out that there are no guarantees the market will deliver 9% annually. Returns will vary considerably from year to year, but 9% is roughly in line with the historical average annual return.

I think this example shows why I would focus less on finding one spectacular investment and more on keeping money invested for a long time.

I would also reinvest dividends where appropriate and give successful investments time to grow rather than constantly trading in and out of the market. This will allow compounding to do its work.

Focus on quality businesses

If I were choosing individual ASX shares, I would want companies capable of becoming more valuable over many years.

That means looking for strong competitive positions, healthy balance sheets, capable management, and genuine opportunities to keep growing.

This could mean ASX shares like Goodman Group (ASX: GMG), Cochlear Ltd (ASX: COH), TechnologyOne Ltd (ASX: TNE), and Macquarie Group Ltd (ASX: MQG).

The goal would not be to predict which share performs best next month. I would be trying to assemble a collection of businesses capable of compounding earnings and value throughout much of the 20-year period.

Diversification would also be important. It is worth remembering that even businesses that look excellent today can disappoint. So, having a portfolio with sufficient diversification could offer some downside protection.

Consistency could be the biggest advantage

I think the $1,500 monthly contribution into ASX shares is just as important as the return assumption.

There will inevitably be periods when markets fall sharply and investing feels uncomfortable.

Those could actually be some of the most valuable months to keep contributing, because the same $1,500 buys more shares at lower prices.

Foolish takeaway

I would not expect the journey to $1 million to be smooth.

But starting with $20,000, investing $1,500 each month, and targeting a long-term return of around 9% gives the goal a realistic foundation.

For me, the strategy comes down to three things: quality investments, consistent contributions, and enough patience to let compounding do its work.

The post How I’d aim to build a $1 million ASX share portfolio in 20 years appeared first on The Motley Fool Australia.

More reading

• Where I’d invest $10,000 in ASX shares in September
• How I’d use ASX shares to build a second source of wealth
• Two ASX data centre stocks rated a buy
• 3 ASX shares I’d buy if I were a beginner today
• 2 ASX shares highly recommended to buy: Experts

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 positions in and has recommended Cochlear, Goodman Group, and Macquarie Group. The Motley Fool Australia has recommended Cochlear, Goodman Group, and Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Investing can become complicated very quickly.

There are individual shares to research, results to follow, broker notes to read, and market swings to understand.

But not every investor wants to build a portfolio company by company.

For those who want a simpler way to invest, ASX exchange traded funds (ETFs) can do a lot of the heavy lifting.

Here are three ASX ETFs to consider buying if you want to keep things simple.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

The Vanguard MSCI Index International Shares ETF could be a good starting point.

This fund gives investors exposure to a large collection of companies listed across developed markets.

I think this is valuable for Australian investors because the local share market is quite concentrated. Banks, miners, supermarkets, and a handful of healthcare and industrial names do a lot of the work.

The Vanguard MSCI Index International Shares ETF changes that in one trade. It gives investors access to global companies involved in technology, healthcare, financial services, consumer products, industrials, and communications.

That makes it a simple way to move beyond Australia without having to choose which overseas shares to buy.

iShares S&P 500 ETF (ASX: IVV)

The iShares S&P 500 ETF is another ASX ETF that can keep investing simple.

This fund tracks the S&P 500 Index, which is where you’ll find 500 of the largest listed companies in the United States.

That includes many of the businesses already shaping the global economy through cloud computing, artificial intelligence, software, payments, healthcare, consumer brands, industrial products, and digital advertising.

There is some overlap with the Vanguard MSCI Index International Shares ETF because the United States is such a large part of global share markets.

But the iShares S&P 500 ETF gives investors a more direct exposure to corporate America and the S&P 500, which has been one of the world’s most important long-term wealth-building markets.

For investors who want a simple, low-fuss way to own leading US companies, this ETF could be worth considering.

Betashares Global Cybersecurity ETF (ASX: HACK)

A third ASX ETF to look at is the Betashares Global Cybersecurity ETF.

It gives investors access to companies helping protect networks, cloud systems, devices, data, payments, and digital identities.

This could be a good place to be. As more of the economy moves online, more money needs to be spent keeping it safe.

Businesses now rely on cloud software, remote access, online payments, artificial intelligence tools, and connected systems. None of that works properly if security fails.

The Betashares Global Cybersecurity ETF will not be as diversified as a broad global ETF, so investors should expect more ups and downs. But as a long-term theme, cybersecurity looks like a problem that companies cannot afford to ignore.

The post 3 ASX ETFs to buy for simple investing appeared first on The Motley Fool Australia.

More reading

• Is the Vanguard US Total Market ETF (VTS) the best buy for investing in America?
• Why I think the IVV ETF is a strong buy for ASX investors
• 3 amazing ASX ETFs for Aussie investors in September
• VGS vs VHY: Which Vanguard ETF comes out on top?
• Why every Aussie investor should own one of these ASX ETFs

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 BetaShares Global Cybersecurity ETF and iShares S&P 500 ETF. The Motley Fool Australia has recommended Vanguard Msci Index International Shares ETF and iShares S&P 500 ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

On Thursday, the S&P/ASX 200 Index (ASX: XJO) was out of form and sank into the red. The benchmark index fell 1% to 9,038.2 points.

Will the market be able to bounce back from this on Friday and end the week on a high? Here are five things to watch:

ASX 200 expected to rise

The Australian share market looks set for a positive session on Friday following a strong night of trade in the United States. According to the latest SPI futures, the ASX 200 is expected to open 11 points higher this morning. On Wall Street, the Dow Jones was up 0.2%, the S&P 500 rose 0.7%, and the Nasdaq jumped 1.55%.

Oil prices rise

ASX 200 energy shares Santos Ltd (ASX: STO) and Woodside Energy Group Ltd (ASX: WDS)could have a good finish to the week after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 1.55% to US$83.51 a barrel and the Brent crude oil price is up 1.9% to US$89.52 a barrel. This follows news that the White House has stated there are no US-Iran peace talks happening.

NextDC results

NextDC Ltd (ASX: NXT) shares will be on watch on Friday after the data centre operator released its FY 2026 results. The company reported a 16% increase in revenue to $405 million and a 15% lift in underlying EBITDA to $248.8 million. Both were ahead of management’s guidance range for FY 2026. This was driven by a record 202% increase in contracted utilisation to 740.1MW.

Gold price edges higher

ASX 200 gold shares Evolution Mining Ltd (ASX: EVN) and Newmont Corporation (ASX: NEM) could have a decent finish to the week after the gold price edged higher overnight. According to CNBC, the gold futures price is up 0.1% to US$4,657.6 an ounce. This may have been driven by easing interest rate hike expectations.

Sigma Healthcare upgraded

Chemist Warehouse owner Sigma Healthcare Ltd (ASX: SIG) could be an ASX 200 share to buy according to Bell Potter. This morning, in response to its results, the broker has upgraded the company’s shares to a buy rating with a $3.00 price target. It said: “The obvious overhang on the stock is the potential sell down by founders now that their 5.0bn share are out of escrow. Nevertheless the earnings outlook remains exceptionally strong with debt leverage falling and dividends likely to grow. Execution on the merger between the legacy Sigma and CWG appears to have been well executed by the highly skilled management team.”

The post 5 things to watch on the ASX 200 on Friday appeared first on The Motley Fool Australia.

More reading

• Should I buy BHP shares before the end of August?
• 37 ASX shares going ex-dividend next week
• NEXTDC share price in focus after record FY26 earnings and strong outlook
• Here are the top 10 ASX 200 shares today
• Why is the ASX 200 falling to a 4-day low today?

Motley Fool contributor James Mickleboro has positions in Nextdc and Woodside Energy Group Ltd. 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.

ASX dividend shares are a simple way for Australian investors to earn a regular passive income.

But because there are so many on offer, all yielding different amounts, it can be difficult to find the best ones to invest in.

Here are two of my top ASX dividend stock picks. And they all both pay their shareholders a yield of 8% or more.

BetaShares Australian Top 20 Equities Yield Maximiser Complex ETF (ASX: YMAX)

Unlike many ASX shares listed on the sharemarket, YMAX is an ASX-listed exchange-traded fund (ETF). That means that it’s not a straight company stock, but instead it gives its shareholders exposure to Australia’s 20 largest blue-chip shares. 

The fund uses a covered call strategy to generate extra income that is typically higher than dividend yields alone. It generally offers lower volatility than a direct investment in the underlying shares. It does not aim to track an index.

YMAX’s largest allocation is to the financial sector, which accounts for 45.8% of its allocation at the time of writing. The materials sector is second, accounting for 22.7% of the ETF.

The fund also invests into the consumer discretionary, consumer staples, energy, industrials, real estate, communications, and healthcare sectors. 

Aside from diversification, YMAX offers another perk that many other ASX shares on the index don’t. It pays its shareholders a dividend every single month.  

As of the 31st of July, the YMAX ETF has a 12-month gross distribution yield of 8.6%, and a net yield of 7.3%. The total franking level is 41.2%.

The ASX dividend share’s most recent dividend was a 5 cents per unit payment to shareholders in mid-August. It has paid between 3.5 cents and 5 cents per share since it moved to monthly payouts in February this year. Prior to this, YMAX paid shareholders on a quarterly basis.

Metrics Master Income Trust (ASX: MXT)

The Metrics Master Income Trust is a listed investment trust (LIT) which gives direct exposure to the Australian corporate loan market. This is a space currently dominated by regulated Australian banks.

Rather than owning a portfolio of ASX shares, the trust has a portfolio of corporate loans and private credit investments (an increasingly popular asset class for income-focused investors). It currently manages around $40 billion in assets.

Metrics Master Income Trust said it targets a return of the Reserve Bank cash rate plus 3.25% per annum through the economic cycle. This is net of around 7.60% per annum fees. 

Distributions are paid monthly, and there is also a distribution reinvestment plan (DRP). The plan allows its investors to reinvest their monthly income distributions.

The Trust’s most recent unfranked dividend of 1.44 cents was paid to shareholders earlier this month. The latest dividend means that the fund has paid 12 dividends to investors over the past 12 months, totalling 15.8 cents per share. At the time of writing, this gives the trust a dividend yield of 8.18%.

The post 2 ASX dividend shares yielding 8% (or higher) appeared first on The Motley Fool Australia.

More reading

• How much superannuation is needed to target a $50,000 annual passive income?
• Metrics Master Income Trust posts unfranked August 2026 distribution
• How much passive income can I earn off my $730,000 superannuation balance?
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• 2 ASX dividend shares with yields above 10%

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.

Two ASX fintech shares stand out to me for their potentially enormous US growth opportunities. While both companies already have established businesses, their exposure to the world’s largest economy could provide another leg of growth.

For investors seeking ASX shares with international ambitions, Xero Ltd (ASX: XRO) and Zip Co Ltd (ASX: ZIP) are two names worth considering.

Xero: first moves in US$29 billion market

Xero is a cloud-based accounting software company that helps small and medium-sized businesses manage accounting, invoicing, payments, payroll and other financial tasks.

Australia and New Zealand provided Xero with its foundation, while the UK has developed into another substantial market. The company finished FY26 with 4.92 million customers globally, an impressive customer base for a company that began in New Zealand less than two decades ago.

Yet, Xero estimates its total addressable market at around 100 million small and medium-sized businesses worldwide.

The US could therefore be crucial to the next phase of growth for these ASX fintech shares. Xero had approximately 424,000 US customers at the end of FY26, leaving plenty of room to expand in one of management’s three most important markets.

The acquisition of US billing platform Melio has strengthened Xero’s US proposition by allowing businesses to manage outgoing payments directly through its platform. Management estimates the US small-business payments opportunity alone at US$29 billion.

Xero’s combination of accounting, payments and payroll gives customers more reasons to stay within its ecosystem. Its JAX artificial intelligence platform could provide another growth engine by automating financial tasks and helping customers make better decisions using their existing data.

There are risks, including intense US competition and the need to integrate Melio successfully.

Zip: US is only source of customer growth

Zip is a fintech company that provides buy now, pay later and digital payment services to consumers and merchants. It is also another ASX fintech share with a rapidly expanding US opportunity. The US is already its biggest source of growth, accounting for around two-thirds of revenue in FY26.

Total revenue increased 24.7%, including 37.3% growth in the US in Australian dollar terms. In US dollar terms, US revenue climbed 44.3%, compared with just 4.6% revenue growth in ANZ.

The US is also Zip’s only source of customer growth. US active customers increased 9.3% to 4.65 million, while ANZ active customers declined 8% to 1.88 million. For FY27, Zip expects US total transaction value growth of more than 30%.

Importantly, Zip isn’t simply growing revenue. Operating leverage is helping profits grow substantially faster. Cash gross profit rose 26.2% to $642.3 million in FY26, while cash operating profit jumped 57.9% to $268.9 million.

That combination of strong US growth and improving profitability makes Zip one of the ASX fintech shares I think investors should keep on their radar.

The post 2 ASX fintech shares to buy for their huge US growth potential appeared first on The Motley Fool Australia.

More reading

• 3 excellent ASX shares I’d buy for long-term wealth creation
• What on earth’s going on with Xero shares?
• 2 ASX shares tipped to grow 60% or more in the next 12 months
• 3 reasons why the Zip share price could be a great buy
• Brokers name the ASX 200 winners and losers from the first half of reporting season

Motley Fool contributor Marc Van Dinther 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 Xero. The Motley Fool Australia has positions in and has recommended Xero. 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 have had a strong rally throughout August.

At the time of writing, the ASX mining stock is up around 12% over the past month, and is a huge 58% higher than 12 months ago.

For context, the S&P/ASX 200 Index (ASX: XJO) has increased by around 3% over the past month and is 2% higher than it was 12 months ago, at the time of writing.

Can BHP shares keep climbing higher next month? Is it time to snap up the stock before the next rally or have the shares reached a ceiling?

What happened to BHP shares in August?

BHP started trending higher in early August as the market grew more bullish on copper prices.

But the share price picked up pace after the miner reported its record FY26 earnings results on the 18th of August.

The group posted a strong operational performance across all its key segments and an impressive 27% increase in its underlying EBITDA. 

Investors were clearly thrilled with the update and many have rushed to snap up a stake in the mining company.

Should I buy BHP shares before the end of the month?

If broker analysis is anything to go by, it looks like the shares are now trading around, or even a little above, fair value.

Market Index data shows the majority of brokers have a hold rating on BHP shares. But after the August rally, the average $61.78 target price now implies a potential 8% downside ahead, at the time of writing.

TradingView data shows similar sentiment. The majority of analysts (14 out of 24) have a hold rating on BHP shares. Another six rate the mining stock as a strong buy, and four rate the shares as a sell/strong sell.

Again, the average $62.68 target price now implies a potential 7% downside over the next 12 months, at the time of writing.

However, the range between the maximum and minimum target prices is huge. Some forecast the shares to fall around 35% to $35.14. Meanwhile, others are bullish that BHP shares could soar 36% higher to $91.71 over the next 12 months, at the time of writing.

The team at Morgans downgraded its outlook on BHP shares to a sell and reduced its 12-month target price to $55.30 after the company announced its FY26 results. The broker noted that while it was a solid result, the share price already factors in more upside.

John Athanasiou from Red Leaf Securities has a hold rating on BHP shares following the FY26 results announcement last week. He said that the quality of BHP’s asset base, balance sheet and diversified portfolio leaves existing shareholders with little reason to sell. But after a solid run, he said investors may be better off waiting for a more attractive entry point.

Morgan Stanley renewed its buy rating on BHP shares after the miner’s FY26 report and increased its 12-month price target to $67.50.

The post Should I buy BHP shares before the end of August? appeared first on The Motley Fool Australia.

More reading

• 37 ASX shares going ex-dividend next week
• Here are the top 10 ASX 200 shares today
• Why is the ASX 200 falling to a 4-day low today?
• 5 things to watch on the ASX 200 on Thursday
• Here are the top 10 ASX 200 shares today

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

Lovisa Ltd (ASX: LOV) shares jumped sharply earlier this week after the jewellery retailer announced a solid uplift in profit and revenue.

But the shares remain about a third lower over the past 12 months, and the question remains: where to from here for the share price?

I’ve had a look at two brokers’ reports issued following the release of Lovisa’s results, and the good news is that both rate the shares highly, with bullish share price targets from each.

I’ll get to that shortly. Firstly, let’s look at the results in more depth.

Strong uplift in profits

Lovisa this week reported revenue of $938.8 million, up 17.6%, while net profit was up 10.7% to $95.6 million.

The company also bolstered its final dividend by 22.2% to 33 cents per share, 50% franked.

Chief Executive Officer John Cheston said:

Lovisa has once again been able to deliver strong global sales and profit growth, with the highlights being continued growth in the Americas and Europe and another exceptional Gross Margin performance. I would like to share my appreciation to the global team for their hard work in delivering these outstanding results and continuing the global momentum of the business.

The company’s gross profit was 18.4% higher in FY26, while gross margin was up 60 basis points to 82.6%, “representing a 270 basis point improvement on FY23 following multiple years of gross margin expansion”.

In terms of the start of the current financial year, Lovisa said total sales for the first eight weeks were up 16.4% while comparable same-store sales were up 3%.

The company added:

We continue to focus on opportunities for expanding both our physical and digital store network, with structures in place to drive this growth in existing and new markets and formats, with a long new store runway supporting continued store rollout momentum. Our balance sheet remains strong with available cash and debt facilities supporting continued investment in growth.

Lovisa shares looking cheap according to brokers

Morgans said the results were strong, with net profit coming in ahead of consensus estimates.

The broker added:

Lovisa has ambitious expansion plans, with significant white space opportunity for continued network expansion. Ongoing investment will be needed to expand Lovisa’s multinational network, but the company has the capacity to fund this, and we expect strong returns. We have an accumulate rating and $31.00 target price.

Morgan Stanley is even more bullish on the stock, with a $33.50 target price, compared to the price of $26.98 at the time of writing.

They said they saw a compelling bull case for the stock based on expansion in the total addressable market, extended store roll-outs, and an increasingly diversified business.

Lovisa is valued at $3.06 billion.

The post After a big jump this week, what are brokers saying about the Lovisa share price? appeared first on The Motley Fool Australia.

More reading

• 7 ASX 200 shares downgraded by brokers this week
• Why I think the Lovisa share price is an excellent long-term buy right now
• How much superannuation is needed to target a $50,000 annual passive income?
• Here are the top 10 ASX 200 shares today
• Why is this $3 billion ASX retail stock rocketing 19% today?

Motley Fool contributor Cameron England 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 Lovisa. The Motley Fool Australia has recommended Lovisa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX Small-cap investing often comes with ambitious promises.

Companies may be chasing international markets, rolling out new technology, or pursuing rapid expansion. The potential can be exciting, but growth requires capital, and many smaller businesses run out of cash before that potential becomes reality.

That is what makes Smart Parking Ltd (ASX: SPZ) an interesting ASX small cap to examine.

The parking technology company has delivered record FY26 revenue, earnings, and free cash flow. Its international growth story is now being supported by tangible financial results.

Record earnings and cash flow

Smart Parking helps property owners manage car parks using automatic number plate recognition (ANPR) cameras, software, and payment technology.

It may not be glamorous, but the latest numbers are becoming difficult to ignore.

FY26 revenue increased 63% to $126 million, while adjusted operating earnings (EBITDA) rose 50% to $30.8 million. Adjusted free cash flow also climbed 56% to a record $20 million.

That cash generation separates Smart Parking from the more speculative end of the small-cap market. Rather than relying entirely on new capital or distant forecasts, the existing business is helping fund new sites, technology investment, and international expansion.

Smart Parking finished June with $17.4 million in cash, excluding funds held on behalf of customers. Since then, it has acquired US-based American Parking and announced an on-market share buyback of up to $5 million.

How much growth was organic?

Acquisitions have contributed to Smart Parking’s expansion.

Its February 2025 acquisition of US parking operator Peak Parking provided a full-year contribution in FY26, compared with only four months in the previous year. Headline growth should therefore be considered in that context.

Even so, the result contained encouraging evidence of organic progress. Management said 72% of the revenue uplift came from organic growth, including expanding its ANPR network and improving debt resolution processes.

Smart Parking added more than 500 new ANPR locations during the year, lifting its network to 2,083 sites. That represented a 16% increase from FY25.

The company also generated an additional $7 million of earnings through improved debt resolution in the United Kingdom. Management expects this contribution to moderate to approximately $5 million in FY27, suggesting investors should not simply extrapolate the entire FY26 benefit.

Smart Parking’s site economics remain an important part of the growth story. Management estimates that a new ANPR site requires between $17,000 and $19,000 of upfront investment and can generate between $45,000 and $50,000 in annual revenue. The expected payback period is between six and 12 months.

That creates the potential for a self-funded growth cycle, with cash from established sites helping finance the next round of expansion.

A growing international footprint

Smart Parking is targeting between 450 and 600 net new ANPR sites in FY27. Its longer-term goal is to reach 3,000 sites by December 2028, almost 50% above the FY26 closing total.

The United States could become a major part of that runway.

Peak Parking has performed ahead of the original acquisition case, according to management. Smart Parking then acquired American Parking for US$12 million in July, adding 54 locations across Oklahoma, Texas, and Arkansas.

What are the risks?

Regulation remains one of the clearest risks. Smart Parking relies partly on access to vehicle registration data, while parking breach notices contribute significantly to revenue. Changes to parking or debt collection rules could affect the economics of its largest market, the United Kingdom.

Execution is another consideration. The company must integrate its US acquisitions, roll out its technology, and maintain capital discipline while expanding across several countries.

Foolish takeaway

Smart Parking is developing into something relatively uncommon among ASX small caps: a business pursuing rapid international growth while already producing meaningful earnings and cash flow.

The valuation, regulatory exposure, and demands of overseas expansion should not be overlooked. However, record results, attractive site economics, and a growing international network suggest this unglamorous parking operator has become a more substantial business than its share price performance might imply.

The post This profitable ASX small-cap just posted record results appeared first on The Motley Fool Australia.

More reading

• Smart Parking reports record FY26 earnings and global growth

Motley Fool contributor Leigh Gant 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 Smart Parking. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Your superannuation is a great way to collect a pot of money to fund your retirement. 

But did you know it can also become a regular source of passive income once you stop working? It can help cover day-to-day expenses and enable you to enjoy the lifestyle you’ve worked hard for.

The idea is pretty simple. Instead of sitting as idle cash, your money stays invested and generates dividends and capital growth. You can then use your super to pay a regular income through retirement.

The ultimate goal for many Australians is a $1 million superannuation balance. But exactly how much passive income could a portfolio this size actually generate each month?

Let’s investigate.

What passive income can I earn from my $1 million superannuation balance?

To calculate your potential passive income, you need to multiply your total superannuation balance by the overall dividend yield of your portfolio.

But the problem is, the answer varies widely depending on what dividend yield you pick.

For example, $1 million x 3% = $30,000 per year in dividend payments.

But if your portfolio has a slightly higher dividend yield of around 4%, your passive income will be higher. That’s because $1 million x 4% = $40,000 per year in dividend payments. 

If your superannuation portfolio yields closer to 5%, you could earn $50,000 every year in dividend payments off the same superannuation balance ($1 million x 5% = $50,000).

At a 6% yield, you could earn an annual passive income of around $60,000, and at 7%, it could be even higher, at around $70,000.

And so on… 

As your dividend yield increases, the passive income you can earn from your $1 million superannuation balance also increases.

Note that these figures are based on cash dividends before tax or franking credits. 

Also note that most ASX shares pay dividends to shareholders every six months, which means you’ll receive the passive income in chunks rather than on a monthly or annual basis.

Can’t I just invest in the highest-yielding ASX shares to earn the highest passive income?

Technically yes, but it doesn’t make good investment sense.

When it comes to investing your superannuation into ASX dividend shares, generally the higher the yield, the higher the risk associated with that stock.

Diversification is key

Rather than trying to get rich quick, it’s better to focus on a diverse range of high-quality businesses with strong balance sheets and stable earnings. Ideally, you want to focus on stocks that are most likely to stand the test of time.

Also remember, if you want a 5% yielding portfolio, for example, that doesn’t mean that every investment has to yield 5%. It can be a variation which equates to a combined overall 5% yield.

And remember, you don’t need to invest the whole sum in one go. Start with regular monthly investments and let compounding do some of the hard work for you.

Ok, give me some options of ASX shares I can invest my superannuation in

There are a huge range of ASX dividend shares available at a wide range of yields, but here are some of my top picks right now.

Defensive shares like Telstra Group Ltd (ASX: TLS), Transurban Group (ASX: TCL), or APA Group (ASX: APA) are a solid choice for income-seeking investors. These all yield between 4% and 5.5%, at the time of writing.

Non-discretionary ASX consumer staples stocks are also naturally defensive. Supermarket giants like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) can generate stable cash flow across all phases of the economic cycle. This translates to consistent dividends for shareholders. These shares pay a slightly lower dividend, between 2.5% and 3%, at the time of writing.

Elsewhere, ASX bank stocks remain a popular choice. The four major banks dominate the S&P/ASX 200 Index (ASX: XJO) by market capitalisation, and their defensive qualities mean their shares often bounce back during economic recovery. Commonwealth Bank of Australia (ASX: CBA) yields around 3%, while National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC), and ANZ Group Holdings Ltd (ASX: ANZ) all yield a little higher, at around 4.5%.

The post How much passive income can I earn off a $1 million superannuation balance? appeared first on The Motley Fool Australia.

More reading

• How much could $10,000 in Woolworths shares be worth in a year?
• 37 ASX shares going ex-dividend next week
• How much is needed in superannuation for $2,500 in weekly passive income?
• Do leading brokers rate Woolworths shares as a buy following its results?
• Buy, hold, sell: Coles, Paladin Energy, and Woodside shares

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 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.

As ASX blue-chip stocks release highly anticipated earnings results, brokers and investors are adjusting their outlooks accordingly. 

Earlier this week, Woolworths Group Ltd (ASX: WOW) released full-year results.

Key results included: 

• Group sales rose 3.6% to $71.54 billion.
• EBITDA before significant items lifted 6.7% to $6.09 billion.
• EBIT before significant items increased 12.7% to $3.11 billion.
• NPAT before significant items jumped 15.4% to $1.60 billion.
• Final fully franked dividend of 52 cents per share, up 15.6% from last year.

Speaking on the results, Woolworths Group CEO Amanda Bardwell said:

The action we have taken in F26 to deliver more value for customers, greater convenience and better execution has improved customer advocacy and sales momentum in our key Australian Food business, particularly in H2. Sales momentum together with strong productivity and cost discipline has delivered solid EBIT growth with an increased contribution from all trading segments.

This prompted a positive reaction from the market, as Woolworths shares have climbed since the announcement. 

However for prospective investors, it is worth noting that Woolworths shares have already climbed over 34% year to date, making it difficult to project big upside. 

What are experts saying?

Yesterday, Woolworths shares closed at $39.55 per share. 

The team at Bell Potter was impressed by the recent results and raised its price target to $42.35. 

This indicates 7% upside. 

Elsewhere, Morgans has a price target of $43.50, indicating a 10% upside. 

However, let’s not forget the recently updated forward dividend yield of 2.38%. 

Taking all of this into consideration, if Woolworths shares were to reach the target set by Bell Potter in the next 12 months, the shares would be worth about $10,707.98, while the estimated dividends would add approximately $238, giving a total value of around $10,945.98, or a 9.46% total return.

If Woolworths shares reached the target set by Morgans, the investment would be worth approximately $10,998.74 plus the estimated $238 dividend, for a total of about $11,236.74, representing a 12.37% total return. 

These calculations assume the 2.38% forward yield remains unchanged and dividends are taken as cash rather than reinvested; actual returns will vary with the share price and dividends paid

Why there might be more upside somewhere else 

While these projections would be a healthy return, there is another ASX consumer staples stock worth considering over the next 12 months. 

Treasury Wine Estates Ltd (ASX: TWE) are trading at around $5.55 per share, but could be set to rise significantly over the next 12 months. 

A recent target from Morgans suggests this could hit $7.30 in the next year. 

From current levels, this indicates over 31% upside. 

This means a $10,000 investment could grow to approximately $13,153 if it met this target. 

The post How much could $10,000 in Woolworths shares be worth in a year? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell 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 Treasury Wine Estates. The Motley Fool Australia has positions in and has recommended Treasury Wine Estates. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.