Building a portfolio of ASX shares that can generate income alongside your usual earnings is a great way to enhance your financial security and diversify your income streams.

How to get started

Generating substantial earnings from dividends does however demand substantial amounts of savings, and getting there can seem an insurmountable task.

Therefore, it’s good to start relatively small, and use the power of compound interest to your advantage.

Today, I’m looking at what can be built up from a base of $20,000.

To generate the target of $5,000 per year in dividend income, you’d be looking at amassing about $100,000 in capital.

I’d argue you could generate about 7% per year from a combination of capital increases – share price growth – and dividends.

If you start with $20,000 in savings, I’d aim to save a further $100 per week.

Over a nine-year period, and assuming a return of 7% per year, you would have $99,055 at the end of this time.

If you’d like to tweak the calculations yourself, head over to the Federal Government’s Moneysmart calculator and have a play around.

Once you hit the $100,000 mark, if you choose, you could start taking your dividends out as an income stream rather than reinvesting them.

So at this stage, what sort of stocks would you be looking to own?

Building an income-generating portfolio

Firstly, it’s a good idea to keep in mind whether the stocks are paying franked dividends.

A fully-franked share comes with a 30% tax credit for the tax already paid by the company, meaning you do not have to pay your full tax rate on the dividends earned.

In terms of trying to hit our target of $5,000 a year, you’d need to be aiming for a dividend yield of 5% – but keep in mind this doesn’t take into account any tax you’d need to pay.

Tolls roads operator Atlas Arteria Ltd (ASX: ALX) is a reasonable company to consider, as it is currently paying a 9% yield, with brokers expecting a relatively strong yield to be maintained for the next few years.

Gas pipelines operator APA Group Ltd (ASX: APA) is also a good fit, paying a 5.39% dividend, albeit only 31% franked.

Investment company Wam Active Ltd (ASX: WAA) is paying 7.4%, while Argo Investments Ltd (ASX: ARG) is paying 4.18%.

Among the banks, Westpac Banking Corp (ASX: WBC) is paying 4.47% while Bank of Queensland Ltd (ASX: BOQ) is paying 6.1%.

Retailer Universal Store Holdings Ltd (ASX: UNI) also has a healthy dividend yield at 6.22%.

So as you can see, there are plenty of stocks around which can deliver decent yields once your savings have hit the target.

The post Starting with $20,000, how to build a portfolio generating $5,000 a year in passive income appeared first on The Motley Fool Australia.

More reading

• Atlas Arteria declares 20c H1 2026 distribution
• 2 ASX dividend shares raising dividends like clockwork
• How much do I need in superannuation to receive $1,000 passive income per week?
• 3 ASX dividend stocks to provide passive income through retirement 
• How to make $26,000 of passive income from ASX shares

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 no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Apa Group. The Motley Fool Australia has recommended Universal Store. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Atlas Arteria Group (ASX: ALX) share price is in focus after the company announced a distribution of 20.0 cents per stapled security for the first half of 2026, to be paid unfranked in October.

What did Atlas Arteria report?

• Interim distribution of 20.0 Australian cents per stapled security for H1 FY26
• Distribution will be unfranked
• Ex-entitlement date: 23 September 2026
• Record date: 24 September 2026
• Estimated payment date: 7 October 2026

What else do investors need to know?

The H1 2026 distribution applies for the six months to 30 June 2026. The payment will be made by both Atlas Arteria Limited and Atlas Arteria International Limited, as part of the group’s usual distribution policy.

This distribution will not be franked for tax purposes. Atlas Arteria shareholders are encouraged to check the company’s website for information about distribution treatment for their specific circumstances.

The business operates toll roads across France, Germany, and the US, including interests in APRR, AREA, A79, ADELAC, Chicago Skyway, Dulles Greenway, and the Warnow Tunnel.

What’s next for Atlas Arteria?

The company remains focused on delivering value for securityholders by managing its global toll road portfolio strategically. Investors can expect continued attention to sustainable business practices and disciplined asset management.

Looking forward, Atlas Arteria intends to maintain its current approach and provide regular distributions, but future payments will depend on business performance and market conditions.

Atlas Arteria share price snapshot

Over the past 12 months, Atlas Arteria shares have declined 16%, trailing the S&P/ASX 200 Index (ASX: XJO), which is flat over the same period.

View Original Announcement

The post Atlas Arteria declares 20c H1 2026 distribution appeared first on The Motley Fool Australia.

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• Starting with $20,000, how to build a portfolio generating $5,000 a year in passive income
• 3 ASX dividend stocks to provide passive income through retirement 
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• 3 ASX shares with dividend yields of between 6% and 11%
• How much superannuation do I need to earn $80,000 per year in passive income?

Motley Fool contributor Laura Stewart 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. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.

ASX dividend shares that increase their payouts regularly are very attractive to me.

I prefer consistent dividend growth over large dividend yields or cyclical payouts that bounce up and down.

If I’m relying on passive income, then I want to have a high level of confidence that my dividends will continue flowing into the bank account.

Below are the two ASX dividend shares that have increased their dividend payouts the most years in a row.  

APA Group (ASX: APA)

APA has the second-best record on the ASX. It has increased its annual distribution every year for the past 22 financial years.

The business describes itself as a leading energy infrastructure business with a portfolio of more than $20 billion of assets. That includes gas transmission, processing, compression and storage assets. It also has gas-powered energy generation and renewable energy generation. Additionally, APA owns and operates battery storage and electricity transmission infrastructure.

The business regularly invests in its portfolio such as new pipelines, new energy generation and new electricity transmission, helping grow its free cash flow, which funds the larger distributions. In FY26, free cash flow grew 3.2% to $1.1 billion and underlying operation profit (EBITDA) grew 8.3% to $2.18 billion.

The ASX dividend share grew its FY26 distribution by 1.8% to 58 cents per security and expects to hike it again in FY27 to 59 cents per security. That translates into a guided distribution yield of 5.5% for FY27.

I like how the business is balancing investing in the business, together with rewarding investors with larger payouts.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Patts has the best record of all when it comes to consistent dividend growth, which is partly why this business is one of my largest holdings.

The ASX dividend share has increased its regular annual dividend per share every year since 1998, which is a truly impressive streak.

It has managed to deliver that payout growth by maintaining a diversified portfolio across a range of sectors that can produce defensive/largely uncorrelated cash flow. Some of the places it’s invested in includes energy, telecommunications, property, building products, retirement living, agriculture, water entitlements, financial services, electrification, swimming schools, credit and plenty more.

Having that diversification helps reduce risks and helps Soul Patts search for opportunities across a wide array of assets. It has highlighted it’s looking internationally for opportunities too – Australia and the ASX have been the focus.

In the FY26 half-year result, Soul Patts hiked its interim dividend by 9.1% to 48 cents per share, which was a solid increase, in my view.

The ASX dividend share’s latest two dividends amount to a grossed-up dividend yield of 3.5%, including franking credits, at the time of writing.

Overall, I think these are two of the best ASX dividend shares around and are likely to continue hiking their payouts for the foreseeable future.

The post 2 ASX dividend shares raising dividends like clockwork appeared first on The Motley Fool Australia.

More reading

• Starting with $20,000, how to build a portfolio generating $5,000 a year in passive income
• 27,131 shares of this ASX dividend stock pays an income equal to the Age Pension
• How much do I need in superannuation to receive $1,000 passive income per week?
• Soul Patts vs PM Capital Global Opportunities Fund: Which is better?
• How to make $26,000 of passive income from ASX shares

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.