Looking to earn an extra $10,000 a year in passive income by buying quality S&P/ASX 200 Index (ASX: XJO) dividend shares?

We’ll look at two ASX dividend gems below that I think belong in every income investor’s portfolio.

But first, some important reminders.

Diversity and trailing yields

While we’ll look at two quality ASX 200 dividend stocks below, a properly diversified passive income portfolio will contain a lot more than just two stocks. Though there’s no correct number for everyone, around 15 or so is a decent target.

Ideally these companies will operate in various sectors and locations. This will reduce the risk of your income stream taking an outsized hit if any one company or sector runs into headwinds.

Also, bear in mind that the yields you generally see are trailing yields. Future yields may be higher or lower depending on a range of company specific and macroeconomic factors.

Which brings us to…

Two ASX dividend gems for a $10,000 annual passive income

The first ASX dividend gem you may want to buy for passive income is Woodside Energy Group Ltd (ASX: WDS).

Recently trading for $33.00 a share, the ASX 200 oil and gas stock has gained 33% over the past year.

As for that income, Woodside paid (or shortly will pay) $1.63 a share in fully franked dividends over the past year. The stock traded ex-dividend on 3 September. Eligible stockholders can expect to receive that payout on 25 September.

At the recent share price, then, Woodside shares trade on a fully franked 4.9% trailing dividend yield.

The second ASX dividend gem I believe should have a place in every passive income investor’s portfolio is Telstra Group Ltd (ASX: TLS).

Recently trading for $4.76 a share, the ASX 200 telco is down 2.7% over the past 12 months.

On the income front, Telstra has paid (or shortly will pay) two dividends totalling 21 cents a share, franked at 90%. Telstra shares traded ex-dividend on 26 August. Eligible stockholders can expect to receive that payout on 24 September.

At the recent share price Telstra shares trade on a partly franked 4.4% trailing dividend yield.

How much to invest?

Assuming you invest the same amount in each ASX dividend gem, you could expect to earn a yield of 4.7%, based on those trailing yields.

To earn $10,000 a year in passive income, you’d need to invest $212,766 today.

Now, that’s a sizeable amount to invest in one go.

But that’s okay.

Investing is a long game. You can always invest a smaller amount on a regular basis, and you’ll reach your passive income goal in good time.

The post 2 ASX dividend gems I’d buy today for $10,000 a year in passive income appeared first on The Motley Fool Australia.

More reading

• $10,000 invested in Santos and Woodside shares 3 years ago is now worth…
• 5 things to watch on the ASX 200 on Friday
• How much superannuation do I need to earn $80,000 per year in passive income?
• 9 ASX 200 shares earning strengthened buy ratings this week
• How much superannuation do I need to earn $100 a day in passive income?

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

Rio Tinto Ltd (ASX: RIO) and Fortescue Ltd (ASX: FMG) shares have delivered markedly different returns over the last three years.

One of the S&P/ASX 200 Index (ASX: XJO) mining giants has smashed the 24.5% gains posted by the benchmark over the past three years (as at 10 September). The other has delivered far less.

So, which was the better investment?

Fortescue shares flounder

Well, it wasn’t Fortescue.

Three years ago, on 8 September 2023, you could have bought Fortescue shares for $19.40 apiece.

So, for $10,000 you could have 515 shares.

On Thursday, shares were trading for $17.61 each, down 9.2% over three years.

But stockholders wouldn’t have done quite that badly.

That’s because if you held Fortescue shares for the past three years, you’d also have received the last six fully franked Fortescue dividend payments totalling $4.15 a share. (The final FY 2026 Fortescue dividend will be paid on 29 September.)

If we add that back into the recent share price, then the accumulated value of the shares you bought in September 2023 is now worth $21.76. And the 515 shares you picked up for $10,000 are worth an accumulated $11,207.

So, what about Rio Tinto?

Buying $10,000 worth of Rio Tinto shares

Unlike Fortescue shares, Rio Tinto shares have strongly outperformed over the past three years.

On 8 September 2023, Rio Tinto shares were trading for $111.17 apiece. Meaning you could have bought 89 shares with a $10,000 investment, with $105 in pocket money left over.

On Thursday, shares were changing hands for $179.33 each, up 61.3% in three years.

Investors have also banked significant passive income from the ASX 200 mining stock along the way.

If you owned Rio Tinto shares for the past three years, you would have received, or will shortly receive, the past six fully franked dividend payments. (The interim 2026 Rio Tinto dividend will be paid out on 24 September.)

All told those six Rio Tinto dividends come out to a rounded $19.18 a share.

If we add that back into the recent share price, then the accumulated value of the Rio Tinto stock you picked up in September 2023 is now worth $198.51 a share.

And the 89 shares you bought for $10,000 are worth an accumulated $17,667.

So, for this time period at least, Rio Tinto clearly takes the prize over Fortescue shares.

How about in 2026?

As of Thursday, the ASX 200 has gained 0.7% year to date.

Over this same time, Rio Tinto shares have gained 21.5% and paid two dividends.

And Fortescue shares have tumbled 20.5% and paid two dividends.

The post $10,00 invested in Rio Tinto and Fortescue shares 3 years ago is now worth… appeared first on The Motley Fool Australia.

More reading

• Down almost 10%! Why are ASX copper shares tanking?
• How much superannuation do I need to earn $80,000 per year in passive income?
• Iron ore is back below US$100. Are BHP and Rio Tinto shares still buys?
• ASX 200 dives to a 6-week low. What’s behind today’s sell-off?
• How many Fortescue shares do I need to buy to earn $1,000 per month in passive income?

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.

The iShares Global 100 AUD ETF (ASX: IOO) puts some of the world’s biggest multinational businesses into a single ASX investment.

That includes companies leading areas such as artificial intelligence, cloud computing, financial services, healthcare, and consumer technology.

With so many established global names under one roof, is the IOO ETF a good buy today?

A portfolio of global leaders

The IOO ETF tracks the S&P Global 100 Index, giving investors exposure to 100 major multinational companies from around the world.

I like the focus on businesses that have already built significant global operations.

Major holdings include Nvidia, Apple, Microsoft, Amazon, Alphabet, and JPMorgan.

These companies give the fund exposure to areas including artificial intelligence, cloud computing, digital advertising, ecommerce, financial services, and consumer technology.

There are also businesses outside the technology sector, which gives investors exposure to other parts of the global economy.

For me, one of the advantages is that I do not need to decide which individual global giant will deliver the strongest returns over the next decade. The ETF gives me exposure to a collection of them through a simple ASX investment.

Concentration comes with trade-offs

The IOO ETF is more concentrated than some broad global ETFs.

With around 100 holdings, individual companies can have a greater influence on performance. Its largest positions also account for a meaningful proportion of the portfolio.

I do not necessarily see that as a negative. If I were buying this fund, I would be doing so because I specifically wanted greater exposure to some of the world’s biggest and most established businesses.

But investors should understand that the fund may behave differently from an ETF holding more than 1,000 stocks.

If several of its largest holdings struggle at the same time, performance could suffer.

Why I would buy

What I like most about the IOO ETF is the quality of the businesses it allows me to own without needing to build the portfolio myself.

Many of its holdings have spent years establishing global customer bases, strong brands, valuable technology, or leading positions within their industries.

I think several of them could still be considerably larger businesses a decade from now.

That makes IOO ETF a fund I would be comfortable gradually adding to rather than trying to pick the perfect entry point.

Foolish takeaway

So, would I buy the IOO ETF now? Yes, I would.

I like the opportunity to own a focused collection of major global businesses through one ASX investment.

The portfolio is relatively concentrated, and some of its biggest holdings are not cheap, so I would expect plenty of volatility along the way.

But for an investor prepared to hold for years, I think the companies inside IOO give the ETF a strong long-term foundation.

The post Should I buy the iShares Global 100 ETF (IOO) now? appeared first on The Motley Fool Australia.

More reading

• You don’t need to own Nvidia to invest in AI – Here are the best Aussie artificial intelligence shares
• This ASX stock could be a surprise winner of the AI boom
• These are the 10 richest people in the world in September
• ASX shares investors are getting younger and trading more often: CBA report
• Want to invest in AI shares? Here’s how to do it on the ASX

JPMorgan Chase is an advertising partner of Motley Fool Money. 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 Alphabet, Amazon, Apple, JPMorgan Chase, Microsoft, and Nvidia. The Motley Fool Australia has recommended Alphabet, Amazon, Apple, Microsoft, and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.