The BetaShares NASDAQ 100 ETF (ASX: NDQ) is one of the most popular exchange-traded funds (ETFs) on the ASX, with net assets of $2.6 billion. It has managed to achieve good capital growth, though investors may be wondering about the potential of dividend income.

Over the last five years, the Betashares Nasdaq 100 ETF has risen by 78%. That’s comfortably more than the S&P/ASX 200 Index (ASX: XJO), which has only risen by 22% over the same time period. But, that includes the COVID period.

One of the most important things to remember with an ETF is that the performance is dictated by the underlying holdings. If the underlying holdings, as a whole, go up in price then the ETF price should go up too (after accounting for fees).

ETFs are also meant to pass on the investment income of dividends received from the business holdings to investors as well.

This ETF owns 100 of the biggest businesses listed on the NASDAQ, such as Apple, Microsoft, Amazon.com, Alphabet and Tesla. The bigger the position in the portfolio, the more the company’s dividend yield influences the whole ETF’s yield.

But, some of the names, like Amazon.com, Alphabet and Tesla don’t even pay a dividend to investors.

Dividend yield estimate

BetaShares says that the 12-month distribution from the BetaShares NASDAQ 100 ETF is 3.3%. That’s the yield calculated by “summing the prior 12-month per unit distributions divided by the closing net asset value (NAV) per unit.”

However, I think it’s important to remember that ETFs also distribute crystallised capital gains to investors. So, if the ETF sells some of its shares and has made a profit, then that is included in the distribution. So, the actual dividend income of the ETF may not make up the whole distribution.

Between July 2019 to January 2023, the distribution yield has ranged between 2.35% to 5%, according to BetaShares.

Is BetaShares NASDAQ 100 ETF worth buying for passive income?

On the dividend income alone, I wouldn’t suggest it’s going to pay a big yield.

It’s not surprising considering the current Microsoft dividend yield is only just above 1% and the Apple dividend yield is less than 1%, according to Google Finance.

However, when we look at the distributions by the ETF, it’s a solid yield over the past few years. If its yield is around 3% over the next three years, that would be pretty good to me.

But, the main potential here, in my opinion, is capital growth. Over the last five years, it has returned an average of 15.2% per annum, which includes a drop of more than 20% since the start of 2022. Though, past performance is not a reliable indicator of future performance.

I think this group of businesses has an attractive future with global growth potential.

The post Is the BetaShares NASDAQ 100 ETF (NDQ) worth buying for dividend income? appeared first on The Motley Fool Australia.

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• 3 ETFs for smart ASX investors in March
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• 3 top tech ETFs for ASX investors to buy right now
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• Here are 3 quality ETFs for ASX investors to buy right now

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison 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 Alphabet, Amazon.com, Apple, BetaShares Nasdaq 100 ETF, Microsoft, and Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended the following options: long March 2023 $120 calls on Apple and short March 2023 $130 calls on Apple. The Motley Fool Australia has positions in and has recommended BetaShares Nasdaq 100 ETF. The Motley Fool Australia has recommended Alphabet, Amazon.com, and Apple. 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 National Australia Bank Ltd (ASX: NAB) share price is trading in the green on Friday.

The big four bank’s stock is currently gaining 0.7% to trade at $29.035. That’s compared to the S&P/ASX 200 Index (ASX: XJO)’s 0.3% rise.

NAB shares have had a rough slog lately, falling 9% over the last month amid the release of its seemingly strong quarterly earnings.

But does its new share price leave NAB in the buy zone? Let’s take a look.

Are NAB shares a buy at $29?

Two top brokers agree the NAB share price likely offers an upside from here. However, they’re divided over whether the stock is a buy.

Goldman Sachs is the more bullish of the pair. It’s dubbed the big bank stock a buy, slapping it with a $35.42 price target ­– a potential 22% upside.

The broker noted the bank’s recent “better than expected [quarterly] performance”, helped along by stronger revenues and lower bad and doubtful debts. Though, that was partially offset by higher expenses.

It also noted that it believes NAB offers the best exposure to momentum in commercial volumes over housing volumes. Meanwhile, its high productivity levels over the last three years are said to have left it well-positioned to push through inflationary pressure.

Finally, its net interest margin (NIM) is tipped to peak in the second half of financial year 2023 before falling steadily.

Macquarie might also like the look of the NAB share price’s current levels.

The broker’s neutral on the stock but tips it to rise to $31, my Fool colleague James reported last month. That marks a potential 6.8% upside.

The ASX 200 bank share holds a top spot in the broker’s income portfolio, with its dividends forecasted to grow to $1.61 this financial year.

That could leave the stock with a 5.5% dividend yield at its current share price.

The post Should I buy NAB shares at $29? appeared first on The Motley Fool Australia.

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• Watch out CBA: This ASX 200 bank share is rapidly growing
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• Why I think NAB could be the best ASX 200 bank share to buy right now
• These ASX 200 dividend shares are top of Macquarie’s income portfolio
• The NAB share price is sinking this month. Time to pounce?

Motley Fool contributor Brooke Cooper 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 Goldman Sachs Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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 Fortescue Metals Group Limited (ASX: FMG) share price is up a slender 0.1% during the lunch hour on Friday.

At the time of writing, shares are changing hands for $23.08.

If the S&P/ASX 200 Index (ASX: XJO) iron ore miner can hold onto those gains, today will be the fourth straight day the Fortescue share price finishes in the green.

This follows a hefty loss on Monday to kick off the week.

What happened with the ASX 200 miner on Monday?

The Fortescue share price closed down 7.3% on Monday, finishing the day at $20.81.

Part of that loss stemmed from a slide in commodity prices over the weekend. This saw Rio Tinto Ltd (ASX: RIO) shares finish Monday down 2.9% while the BHP Group Ltd (ASX: BHP) share price fell 3%.

The Fortescue share price came under additional selling pressure on Monday as the stock traded ex-dividend on the day.

The miner reported its half-year results on 15 February, announcing a fully franked interim dividend of 75 cents per share, down 13% from the prior interim dividend.

On Monday, investors buying the stock were no longer entitled to that dividend, sending the share price lower. Investors who owned shares at Friday’s close can expect that dividend payment on 29 March.

Fortescue share price buoyed by green steel ambitions

The Fortescue share price marched higher for the rest of the week, currently up 11% since Monday’s close.

Part of that strength looks to be derived from the company’s industry-leading sustainability push via its subsidiary Fortescue Future Industries (FFI).

The miner’s ‘green steel’ initiative may have shielded it from some of the wider mining sector fallout on Tuesday following news that China’s government had ordered a cutback in steel production at Tangshan.

Chinese officials said the move was necessary to reduce air pollution.

Indeed, on Wednesday Fortescue boss Andrew Forrest pointed to the huge opportunities available to the company in the United States. That’s thanks to the US$437 billion worth of subsidies for new energy projects contained in the US Inflation Reduction Act (IRA).

Mark Hutchison, the head of FFI, jetted off to the US on Wednesday to discuss those opportunities with government and business leaders.

Fortescue share price snapshot

As you can see in the chart below, a big surge in the Fortescue share price since early November has helped send the ASX 200 miner’s shares up 19% over the past 12 months.

The post What’s moving the Fortescue share price this week? appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
• Has this ‘completely changed the landscape’ for the future of Fortescue shares?
• Fortescue share price rebounds on possible China supply restrictions
• Why Appen, Downer, Fortescue, and Invocare shares are crashing today
• Why is the Fortescue share price sinking 8% today?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has 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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Mineral Resources Ltd (ASX: MIN) shares are on course to end the week on a positive note.

In afternoon trade, the mining and mining services company’s shares are up 1% to $90.96.

This means the Mineral Resources share price is now up over 90% since this time last year, as you can see below.

Can Mineral Resources shares keep rising?

The good news is that one leading broker doesn’t believe it is too late to jump on the Mineral Resources train.

In fact, its analysts believe that train is going to chug meaningfully higher from current levels over the next 12 months.

According to a note out of Bell Potter, its analysts have a buy rating and $110.00 price target on its shares.

Based on the current Mineral Resources share price, this implies potential upside of 21%.

Why is Bell Potter bullish?

Bell Potter was impressed with Mineral Resources’ first-half performance, noting that it generated more profit during the six months than it did in the entirety of FY 2022. It said:

Revenue was $2,350m (vs BPe $2,163m). Underlying EBITDA: $939m (vs BPe $901m). Net profit after tax: $390m (vs BPe $399.3m), already exceeding the FY22 full year result.

But the broker doesn’t expect its earnings growth to stop there. Far from it! Its analysts conclude:

We maintain our Buy recommendation and Target price. Over the next two years we forecast that as the business transformation is completed, MIN’s growing production volumes, and improving margins, supported by strong commodity prices, will result in significant earnings growth. In addition to growth in lithium, MIN is undertaking significant Iron Ore growth at the Onslow Iron Project, and developing its Energy business.

It is also worth noting that Bell Potter expects this to underpin a $9.39 per share dividend in FY 2024. This represents a 10.3% dividend yield at current prices.

The post Buy Minerals Resources shares for 21% upside: broker appeared first on The Motley Fool Australia.

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• Here are the top 10 ASX 200 shares today
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• Here are the top 10 ASX 200 shares today
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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 Sayona Mining Ltd (ASX: SYA) share price has been put into the freezer this morning as the company prepares to release news of a capital raise.

Stock in the S&P/ASX 200 Index (ASX: XJO) lithium outfit last traded at 23.5 cents.

And there it will stay until the company releases its much-anticipated announcement or the market opens on Tuesday, whichever comes sooner.

Let’s take a closer look at what’s going on (or not going on) with the soon-to-be lithium producer on Friday.

Sayona share price halted ahead of capital raise announcement

Market watchers might be surprised to see the Sayona Mining share price halted amid expectations of a capital raise this morning.

Indeed, it was only three weeks ago the lithium up-and-comer restated it had $97.9 million of cash on hand and no debt –  enough to fund it for another five quarters.

It also boasted $200 million of unused financing facilities at the end of the December quarter.

Not to mention, the company is expecting to restart production at its North American Lithium (NAL) operation this month.

The Canadian operation’s restart was also previously confirmed to be on budget and will likely see the company realising revenue. The maiden spodumene shipment from the operation is expected to sail in July.

So, why might the company be holding its hand out for extra cash? Well, we won’t know for sure until Sayona shares return to trade.

It’s also worth noting it’s been less than 12 months since the ASX 200 company underwent its last capital raise.

It brought it $190 million through an institutional placement in May 2022, offering new shares for 18 cents apiece. That represented a 12.2% discount to the stock’s prior close.

The funds went towards NAL’s restart and the development of the company’s northern hub.

If a capital raise were to realise such a discount today, Sayona shares would be priced at around 20.6 cents.

The post Why has the Sayona Mining share price just been halted? appeared first on The Motley Fool Australia.

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• Here are the 3 most heavily traded ASX 200 shares on Thursday
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• Why did ASX 200 lithium share Sayona dive 13% in February?
• Here are the 3 most heavily traded ASX 200 shares on Monday

Motley Fool contributor Brooke Cooper 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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This Super mess?

Because that’s what it’s become. A Super – and super – mess.

We started the week with the Federal Government saying that it might be fair to wind back tax concessions on multi-million dollar Super balances.

Fair enough. Taxing a $3 million super balance at 15%, while wage-earners were paying marginal rates of 21%, 39% or 47%, is… generous.

We want people to build retirement savings, of course. But above a certain level, the taxpayer shouldn’t be subsidising it.

That concept, and the $3m balance level, got broad public support, even if begrudgingly in some quarters.

So unremarkable and reasonable was it, the AFR editorialised in favour, and The Today Show lampooned people who were complaining about it.

Then the wheels fell off.

Yes, politically, but that’s not my specific interest, here.

They fell off, economically, as well.

First, setting a tax rate on a ‘balance’, rather than an ‘income level’ is… not ideal.

A Super account with $4m, made up of property yielding, say, 2%, would pay a marginal 30% tax rate on their $80,000 income.

Someone with $2.5m in shares, earning a dividend yield of, say, 6%, would pay a marginal tax rate of 15% on their $150,000 income.

Which is… strange.

Then we found out the $3m won’t be indexed. So, as incomes, Superannuation contributions, and investment returns compound over time, more and more accounts will be caught by the cap.

Remember, Super will compound over a lifetime of 40 – 45 years of work. A $3m cap for someone at 65 now is pretty reasonable. But will it still be reasonable in almost half a century when prices and wages are much, much higher. Probably not.

That is… problematic.

It got worse…

… and this is the piece de resistance.

The Treasury announcement confirmed that the tax would be levied on fund returns, which included unrealised capital gains. What’s an ‘unrealised gain’? It’s the increase in value of an asset, even if that asset isn’t sold.

So, back to our previous $4m example – if the property increased in value by 10%, the ATO would take that $400,000 ‘gain’ and ask the Super fund to pay tax on it – even though no money had changed hands.

That’s not only almost-unique in our tax system, but… ridiculous.

So here we are.

From almost universal (if in some quarters begrudging) acceptance and support for a reduction in Super tax breaks, the Government had delivered a policy that was as controversial as it was complex and, frankly, poorly designed.

(And, back to the politics for a second, was a political gift – with a large bow – for the Opposition).

Now, I’m not sure what is more likely: that the Government was poorly advised, that Treasury got ahead of itself, or that the Government actually meant all of these things, in full knowledge of the implications.

Because let’s be clear:

Using a balance, rather than income level, to set tax rates, would be a huge policy departure (Assets tests are used for some benefits, so it’s not entirely new… but using it to set tax rates would be a big, bad, jump).

Using unrealised gains, in concert with the fund balance, essentially makes this a wealth tax, not an income tax – another piece of new ground.

And using an un-indexed balance cap means the program is designed to capture more Super funds every year.

If the Government takes the view that those things were deliberate, and that they knew exactly what they were doing, it paints a very clear picture. In that scenario, it’d be hard to escape the view that they’re essentially putting a de facto cap on Super at $3m. Anything above that, and you’re subject to not only a higher rate, but a tax bill on unrealised gains that might be larger than the fund’s cash flows, essentially forcing some/many people to liquidate assets.

Again, this is an ‘if’, but at that point, many, perhaps most, people will reduce their Super balances to below that threshold. As I said, a de facto total cap on Super.

And perhaps we’ve been tricked into agreeing with the headline idea – removing concessions for large balances – and getting sucker-punched by the detail.

So, if this is deliberate, it is not just ‘taxing large funds a little more’, but radically resetting Superannuation.

And if it’s accidental? Then it’s hard to escape the view that the Government has been poorly advised, having let the econocrats loose on policy, with insufficient consultation with outside experts.

I’m not sure which is more likely, but neither looks good, from where I stand.

And again, remember I’m someone who has been loudly agreeing with limiting tax concessions where they’re not absolutely needed and too costly.

Frankly, I hope it’s accidental. They can say ‘we were hasty, let us consult and improve things’.

If it’s deliberate? Then it’s bad policy, advocated with a bait-and-switch PR campaign. And that does them no credit.

Now… while I’m mindful that I’ve already written quite a lot, above, if you’re interested (and you should be – this will impact increasing numbers of people!) – I’m going to quickly propose a better alternative.

It’s this simple:

1. All Super accounts are tax-free during our working lives until and unless the balance hits $1.7 million (giving lower income earners the best possible chance of maximising Super)

2. Index the $1.7 million to CPI each year.

3. Once over $1.7m, the fund becomes taxable at 20% of realised gains.

4. Once the member is over 65, the fund must distribute a set percentage of its capital to the member (probably 4% per year).

5. The fund distributions are taxable in the hands of the member, at that member’s marginal tax rate.

6. Every Australian over 65 would get the aged pension, which would be taxable income; but

7. Set the tax free threshold for over 65s at $10,000 above the aged pension level.

What would this do?

A lot. And very, very simply.

First, it rewards saving for retirement.

Second, it gives lower income earners the very best chance to retire with enough Super.

Third, it limits the cost of concessions for higher income earners.

Fourth, it stops Super being used as a tax shelter (by requiring withdrawals and taxing those withdrawals appropriately).

Fifth, it hugely reduces the stupid complexity of the Superannuation system with its various rules and perverse incentives.

And sixth, it removes disincentives for older Australians to dip in and out of the workforce as their circumstances allow / require.

Perfect? No.

Contentious? Yes.

Could it be improved? Probably… and if you have better ideas, let me know!

But doesn’t it seem a helluva lot better than the current tangled mess of incentives and disincentives, with so many different rules and processes that you almost need an accountant on speed-dial just to understand it?

I think my proposal is simple, workable, and achieves all of the aims of Super. It stops it being used as a tax shelter, and reduces the administrative complexity (and cost) enormously.

So… it probably will fall on deaf ears! But just in case…

Treasurer Chalmers, this hasn’t been your best week.

Give me a call. Let’s chat. I’d love to help.

Fool on!

The post Unscrambling the Superannuation mess appeared first on The Motley Fool Australia.

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• Arafura share price plummets. Broker tips 28% upside
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Motley Fool contributor Scott Phillips 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 Arafura Rare Earths Ltd (ASX: ARU) share price has taken a tumble in morning trade.

At the time of writing, the rare earths developer’s shares are down 8% to 56 cents.

Why is the Arafura share price sinking?

Investors have been selling rare earths shares amid concerns over comments made at Tesla’s investor day event on Thursday.

According to Bloomberg, Tesla’s Colin Campbell has stated that it will drop the use of the rare earths in its future electric vehicle models due to health and environmental risks that come with mining the critical minerals.

Tesla instead plans to use a permanent magnet motor that won’t use rare earths.

Yang Jiawen, from Shanghai Metals Market, told Bloomberg:

It would be a big blow to the rare earth industry if there is a complete substitute to rare earth based on current technology. Without Tesla disclosing any information on possible substitutes, I am cautious on the news.

Is this a buying opportunity?

While the team at Bell Potter only has a speculative hold rating on the company’s shares, it does see plenty of value in the Arafura share price at the current level.

It currently has a price target of 72 cents on its shares, which implies potential upside of 28% over the next 12 months.

Last week, it commented:

ARU has performed in-line with our investment thesis, with the stock gaining +74% since initiating in May-22. Over the coming months, key catalysts for further stock price appreciation are 1) reaching a Final Investment Decision (FID) (BPe Mar-23) 2) securing ~85% binding offtake (34% secured to date) and 3) progressing financing for the Nolans Project. As the business successfully reaches these milestones, we believe it prudent to un-wind our risk discount for the Nolans project, which is currently set at 30%. In our view, recent share price appreciation implies these events to be priced in.

The post Arafura share price plummets. Broker tips 28% upside appeared first on The Motley Fool Australia.

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• Why is the Arafura share price storming 7% higher?
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• Why has ASX 300 rare earths stock Arafura rocketed 40% in 2023?

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 market may be pushing higher this morning, but the same cannot be said for the ASX 200 shares listed below.

However, these shares are not falling because something bad has happened. Rather, they are falling because they are trading ex-dividend today.

When a share trades ex-dividend, it means the rights to an upcoming dividend payment remain with the seller and don’t transfer to the buyer. In light of this, a share price will often drop in line with the dividend to reflect this.

Three ASX 200 shares that are trading ex-dividend today are named below. Here’s what you need to know about them and their dividends:

Ampol Ltd (ASX: ALD)

This fuel retailer’s shares are down 6% after trading ex-dividend for its fully franked $1.55 per share final dividend for FY 2022. Eligible shareholders can now look forward to receiving this dividend in their bank accounts at the end of the month on 30 March.

Nine Entertainment Co Holdings Ltd (ASX: NEC)

This media company’s shares have dropped 3% on Friday after going ex-dividend for its interim dividend. Last month, Nine released its half-year results and declared a fully franked interim dividend of 6 cents per share. This will be paid to eligible shareholders next month on 24 April.

Treasury Wine Estates Ltd (ASX: TWE)

Finally, this wine giant’s shares have slipped into the red in early trade. This morning, the Penfolds owner traded ex-dividend for its fully franked 18 cents per share interim dividend. It plans to pay this to eligible shareholders at the start of next month on 4 April.

The post 3 ASX 200 shares trading ex-dividend on Friday appeared first on The Motley Fool Australia.

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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 recommended Nine Entertainment and Treasury Wine Estates. 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 300 Index (ASX: XKO) tech share Dicker Data Ltd (ASX: DDR) has been struggling in recent months.

It’s fallen 38% since this time last year. Not to mention, it was trading at a more-than-two-year low of $7.88 earlier on Tuesday.

But insiders at the tech company appear to be confident in its future. Indeed, they forked out a combined $376,000 to snap up handfuls of its stock this week.

Let’s take a look at all the director buying going down with the embattled ASX 300 computer parts and software distributor’s stock.

Insiders stock up on shares in ASX 300 tech outfit Dicker Data

Directors were snapping up shares in Dicker Data left, right, and centre on Tuesday amid the ASX 300 share’s new 52-week low.

Getting the best deal was executive director and chief information officer Ian Welch, who bought 10,000 shares for $7.90 apiece. That marks a total of $79,000.

Executive director and chief financial officer Mary Stojcevski also acquired a sizeable parcel. She bought 7,000 shares in the tech outfit for $8 apiece – a total of $55,300.

Finally, joining in on the buying action was executive director and chief operating officer Vladimir Mitnovetski, who bought 30,000 of the company’s stocks for an average price of around $8.06 apiece.

That saw Mitnovetski handing over the most cash for their bolstered stake – a grand total of $241,900.

The barrage of director buying came just one day after the ASX 300 tech company posted its full-year earnings, detailing rising revenue but slightly lower profits.

The market sent the stock tumbling on its results despite Mitnovetski forecasting a “prosperous” year to come.

The Dicker Data share price plummeted 3.4% on Monday, dipping to its new multi-year low on Tuesday before returning to the green.

Right now, the tech share has fallen 17% year to date to trade at $8.46 at the time of writing. Meanwhile, the ASX 300 has lifted 4% so far this year.

The post Guess which ASX 300 share has been bought up by 3 directors this week appeared first on The Motley Fool Australia.

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More reading

• Why BHP, Dicker Data, South32, and Winsome Resources are pushing higher
• Dicker Data share price falls on FY22 earnings and dividend decline
• 2 quality ASX 300 shares trading at bargain-basement prices today
• These 2 ASX All Ords shares will trade ex-dividend next week
• Dicker Data share price tumbles to multi-year low. Is it too cheap to miss?

Motley Fool contributor Brooke Cooper 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 Dicker Data. The Motley Fool Australia has positions in and has recommended Dicker Data. 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 ASX share market can be a wonderful place to generate monthly passive income.

Yes, ASX dividend shares aren’t going to be as consistent as savings accounts. Share prices do go up and down. Plus, most companies only pay dividends two or four times a year, so investors need to manage their cash flow a little bit.

But, there are a few things that I love about owning ASX shares.

The good ASX shares are capable of growing their dividend payments over time. Capital growth is possible. Juicy dividend yields are out there, though some investors may not need to target higher yields, and the biggest yields may be cut sooner rather than later (they can be called dividend traps).

How to earn $533 each month in passive income

Getting an annual investment income of over $6,000 a year sounds like a great idea to me.

But, it takes saving and time for an investor to build up to that amount. Most households don’t have a cash pile in the six digits just sitting around.

Earning $533 a month, or $6,396 a year, would likely take building up a portfolio worth over $100,000.

At a 5% dividend yield, it would need a portfolio worth around $128,000 to earn the targeted amount of dividend income.

The question is – how do we get to $128,000?

Shares have produced an average return per annum of 10% per annum over the long term. So, investing and achieving that sort of return can do a lot of the financial lifting with compounding.

How much can we invest? That’s down to each investor to figure out. But, assuming we invested $533 a month of saved money from monthly finances while the portfolio grew at 10% per annum, we’d reach $128,000 in less than 12 years.

Investing more cash each month would achieve the goal of passive income quicker.

Which ASX dividend shares have a 5% dividend yield?

There are a wide number of options that have a good dividend yield, but it could be worthwhile to find ideas that can deliver earnings growth which can help fund dividends, and hopefully lead to share price growth.

Using estimates on Commsec, the following businesses are expected to have a grossed-up (including franking credits) dividend yield of at least 5% for FY23:

Bunnings and Kmart owner Wesfarmers Ltd (ASX: WES) could pay a grossed-up dividend yield of 5.6%.

Telstra Group Ltd (ASX: TLS) could pay a grossed-up dividend yield of 6%.

Pinnacle Investment Management Group Ltd (ASX: PNI) could pay a grossed-up dividend yield of 5.4%.

Centuria Industrial REIT (ASX: CIP) could pay a distribution yield of 5%.

Foolish takeaway

I believe the long-term outlook for ASX shares is still very positive, even if the short-term is a bit uncertain.

I’m working on my own portfolio for growing passive income. Hopefully one day I’ll have enough to replace a lot of my worked earnings.

The post ASX investors: How to earn $533 each month in passive income appeared first on The Motley Fool Australia.

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More reading

• An ASX 200 dividend heavyweight I’d buy over CBA shares right now
• Should I target $1,000 of annual dividends by investing $10,000 today?
• Own Telstra shares? Here’s how the ASX 200 telco is raising $650 million
• Looking to buy Telstra shares? Boss reveals ‘profound opportunity’ for growth
• Here are the 3 most heavily traded ASX 200 shares on Wednesday

Motley Fool contributor Tristan Harrison 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 Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group, Telstra Group, and Wesfarmers. 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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