Income investing involves targeting strong dividend shares to generate passive income. 

Having a reliable passive income stream can be a pathway to early retirement, provide funding for holidays or big purchases, or to supplement your superannuation.  

What kind of investor should be targeting passive income?

Passive income is often a key priority for retirees, particularly those looking to supplement their superannuation and create a more reliable income stream. 

However, income-focused investing isn’t just for retirees.

Investors at other stages of life may also benefit from building a portfolio that generates regular dividends and distributions, whether to help fund living expenses, reinvest and compound returns, or create greater financial flexibility over time. 

For ASX investors, companies with a track record of paying sustainable dividends can therefore appeal to a broad range of investors – not just those already relying on their investments for income.

With that in mind, here is a hypothetical pathway to generating $2,000 a month in passive income with just two trades.

The portfolio 

Generating $2,000 a month in passive income will require some significant capital investment. 

However, it is certainly achievable with a combination of two ASX ETFs. 

The strategy is to target high-yield ASX ETFs that pay monthly distributions. 

The two that stand out are BetaShares Australian Top 20 Equities Yield Maximiser Complex ETF (ASX: YMAX) and Betashares Australian Dividend Harvester Fund (ASX: HVST). 

The YMAX fund aims to generate attractive monthly income and reduce the volatility of portfolio returns by implementing an equity income investment strategy over a portfolio of the 20 largest blue-chip shares listed on the ASX. 

Meanwhile, the HVST fund follows a rules-based ‘dividend harvest’ strategy that seeks to maximise its exposure to dividend-paying Australian shares.

The YMAX fund currently offers a 12 month gross distribution yield of 8.6%. 

The HVST fund currently offers a 12 month gross distribution yield info 7.1%. 

How much do you need to invest?

For a simple hypothetical calculation, we can assume the portfolio is split equally between the two ETFs. 

A split allows some breathing room should one fund reduce its distribution.

With an average gross distribution yield of 7.85%, an investor would need around $305,700 invested to generate $24,000 a year, or $2,000 a month, in gross income. 

Put simply, $152,850 invested in each fund would generate approximately $12,000 per year from each fund, assuming the stated yields were maintained. 

Of course, distributions can change over time, and this example doesn’t account for tax, franking credits, brokerage or changes in the ETFs’ market prices.

Foolish takeaway 

Most investors won’t have $300,000 or more sitting around ready to invest, and that’s okay. 

Building a meaningful passive income stream is typically a long-term process rather than something that happens overnight. 

By making consistent contributions to income-generating investments and reinvesting distributions, investors can gradually build their capital base and move closer to their passive income goals.

The post How to earn $2,000 a month in passive income with this simple portfolio 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 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.

WiseTech Global Ltd (ASX: WTC) shares are back under pressure, falling 5% to $37.65 on Wednesday and wiping out a large chunk of August’s gains.

For much of August, it looked like WiseTech shares couldn’t be stopped. During the first three weeks, the technology stock surged 25%, reaching $45.47 on 25 August.

Then came the FY26 result and the rally quickly lost momentum. Since that result, WiseTech shares have fallen around 17%, leaving them a long way from the $100 level reached a year ago.

The ASX tech stock is now down 45% year to date and 62% over the past 12 months. So, has the rally run out of road?

WiseTech’s numbers weren’t disastrous

WiseTech reported a 46% increase in EBITDA to US$558.4 million for the year to 30 June. That landed within management’s US$550 million to US$585 million guidance range, although it fell slightly short of the US$569.5 million market forecast.

For FY27, management of WiseTech shares expects total revenue growth of 6% to 10%, reaching US$1.48 billion to US$1.54 billion. Underlying EBITDA is forecast to grow 12% to 21%, with margins improving to 49% to 51%.

Global leader with big issues

That outlook is important because the collapse in WiseTech shares hasn’t simply been about deteriorating demand.

WiseTech’s CargoWise platform remains a major logistics software system used by the world’s top 25 freight forwarders, including Toll and DHL. It helps freight forwarders, customs brokers and supply-chain operators manage increasingly complex global trade.

That gives WiseTech exposure to powerful long-term trends, particularly the digitalisation of global trade and growing demand for sophisticated logistics technology.

The bigger issues for WiseTech shares have been investor confidence, governance concerns and regulatory matters.

What do brokers think about WiseTech shares?

Several brokers remain firmly bullish. Morgans retained its buy rating with a trimmed $62.50 price target, while Morgan Stanley maintained its buy rating and $70 target. The latter implies potential upside of around 86% from Wednesday’s share price.

Bell Potter also remains bullish, despite cutting its target from $71.75 to $65. Citi lifted its target from $55.05 to $58.75, while UBS reduced its target from $65 to $56 but retained its buy recommendation.

But there is plenty of scepticism. Jefferies downgraded WiseTech shares to hold with a $45 target, while JP Morgan also has a hold rating, with a $40 target.

At $37.65, the huge gap between those valuations tells investors something important: the market remains deeply divided over WiseTech’s recovery.

Foolish takeaway

Is the WiseTech rally over? It’s too early to say, but Wednesday’s decline shows just how fragile the recovery remains.

The underlying business continues to generate strong earnings growth, and management is forecasting further EBITDA growth in FY27. But investors are clearly demanding more than good financial numbers.

WiseTech needs to rebuild confidence around its strategy, governance and long-term growth prospects. Until that happens, the shares could remain volatile.

For investors willing to look beyond the recent weakness, the bullish broker targets suggest significant upside if WiseTech can deliver. But the wide valuation gap also highlights the risk: the market is far from convinced that the company’s comeback is complete.

The post WiseTech shares are turning red again. Is the rally over? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther has positions in WiseTech Global. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global. The Motley Fool Australia has positions in and has recommended WiseTech Global. 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 been among the best-performing blue-chip stocks in the last year. 

However, after hitting yearly highs last week, they have started to fall, leaving investors scratching their heads at what to do next. 

A stellar run

BHP shares have risen strongly over the past 12 months. 

Since September last year, BHP shares are up an impressive 50%. 

A major driver of BHP’s rise has been its re-rating around copper, which has become an increasingly important and profitable part of the business. 

Copper prices have surged, supported by constrained global supply and strong structural demand from electrification, power infrastructure and AI data centres. 

BHP has also delivered record iron-ore production, roughly 2 Mt of copper production and strong cost control, allowing higher commodity prices to flow through to earnings.

BHP shares also received a boost following its earnings results.

The company reported a record US$32.9 billion underlying EBITDA (up 27%) and US$8.7 billion in dividends for shareholders.

In short, the market is increasingly viewing BHP not simply as an iron-ore miner but as a high-quality, cash-generative copper growth story, which has driven both stronger earnings expectations and a higher valuation.

These tailwinds took BHP shares to a record high of over $68 per share in late August. 

However, its share price has fallen roughly 5% since then.

Shareholders might now be wondering whether it’s time to take profits or hold for the long term. 

Here is what experts are saying. 

Mixed outlook 

Looking across the investment landscape, it appears most experts see BHP shares as fully rated. 

Of 17 forecasts from experts via TradingView, the average one year price target sits at $60.80. 

This would suggest BHP shares could dip a further 6% from current levels. 

On the bullish side, the highest one year target sits at just over $67 per share, while the lowest target sits at $43. 

Recent targets from notable brokers include: 

• Morgan Stanley has a one year target of $67.50
• Morgans sits at $55.30
• Deutsche Bank at $51.

Long-term upside 

While there appears to be little upside in the mid-term, blue-chip stocks like BHP hold long term value.

The company continues to generate substantial cash flow from its diversified portfolio, while its growing exposure to copper provides a potential structural tailwind as demand rises from electrification, data centres and the energy transition. 

In FY2026, copper contributed more than half of BHP’s underlying EBITDA for the first time, highlighting the commodity’s growing importance to the business.

BHP is also investing heavily in future growth, with a pipeline of copper projects expected to lift production significantly through to 2035, alongside the Jansen potash project, which is scheduled to begin production in 2027. 

At the same time, the company continues to return significant amounts of cash to shareholders, with FY26 dividends reaching their highest level in 4 years. 

The post BHP shares are falling – is it time to take profits? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Bell 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.