If you would like a passive income of $50,000 per year, then the share market is arguably the place to do it.

This is because a large number of shares on the Australian share market pay their shareholders dividends each year.

How can you earn $50,000 worth of dividends each year?

There are two ways to earn $50,000 of passive income from dividends each year – the long way and the short way.

The way you go depends entirely on your starting finances. Those that have built up a considerable nest egg can do it the short way.

The short way involves investing into the shares of dividend favourites such as Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS). I estimate that their shares currently offer FY 2021 dividend yields of 5.3% and 5% yields, respectively.

This means that investments of $940,000 and $1 million in their respective shares would yield $50,000 in dividends next year.

What about the long way?

Not everyone has funds of that nature to invest. So how else can you do this?

The long way to achieve this is to invest in dividend-paying shares which have the potential to grow strongly over the long term.

The prime example of this is CSL Limited (ASX: CSL). As I mentioned here earlier this week, if you invested in the biotech giant at its IPO, you would have paid a stock-split-adjusted price of $0.76 per share.

In FY 2020 CSL is expected to pay a dividend of approximately $3.13 per share. This means that its shares provide a yield on the cost you paid of 411%.

This means that if you had invested just $12,165 into CSL’s shares at its IPO in 1994, you would have 16,006 shares. And those shares would be yielding $50,000 in dividends this year.

Not only that, but with CSL’s shares now changing hands at $301.84, they would have a market value of approximately $4.8 million.

Not bad for a ~$12,000 investment, right?

But what about the future? It is worth remembering that very few shares will have as much success as CSL. But I’m confident there are some out there which have the potential to grow both their share price and dividends at a strong rate over the next couple of decades.

Two that come immediately to mind are electronic design software company Altium Limited (ASX: ALU) and ecommerce company Kogan.com Ltd (ASX: KGN).

More reading

• Buy these ASX 200 shares for your kids today
• ASX shares can help millennials retire before their parents
• Why a buy and hold strategy for ASX shares is best
• Should you invest in super or your ASX share portfolio?
• If you invested $10,000 in the Altium IPO, this is how much you’d have now

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Kogan.com ltd and Telstra Limited. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post How to earn $50,000 of passive income with ASX shares appeared first on Motley Fool Australia.

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With over 2,000 companies listed on the ASX, it can be hard to know what to invest in. Especially since most investors have specific needs. So which ASX shares should parents looking to invest early on their children’s behalf buy today?

Unless you watch the share market and have been investing for a while, you are probably looking for a ‘set and forget’ investment. In other words, you want to buy shares in a company that doesn’t require you to constantly keep up to date with its reports. You want something that can be a consistent grower but is on the safer side of the risk profile.

For these reasons, I would start by looking within the S&P/ASX 200 Index (ASX: XJO). In fact, I would start by looking at the below companies as I believe they make great candidates if you’re looking to invest today on your children’s behalf.

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

I would be hard-pressed not to recommend an investment house like ‘Soul Patts’ as a candidate for a child’s portfolio. It has been listed and paying dividends for over 100 years.

Additionally, it has far outperformed the All Ordinaries (ASX: XAO) since 2000. Soul Patts’ managing director, Todd Barlow, recently commented: “Over the last 20 years to 31 January 2020, an investment in WHSP with dividends reinvested has increased by 11.1 times while the Index has increased just 4.2 times.”

Soul Patts makes its money through a diverse range of investments – from stakes in ASX shares such as TPG Telecom Ltd (ASX: TPM), coal miner New Hope Corporation Limited (ASX: NHC) and building supplies manufacturer Brickworks Limited (ASX: BKW), to investments in unlisted equity, real estate and credit.

If there was a downside, it would be that Soul Patts does not currently offer a dividend reinvestment plan. This would mean, depending on the size of the investment, you would have to manually reinvest the dividend payments periodically (if you’re so inclined).

Altium Limited (ASX: ALU)

Altium is a bit more of a growth story when compared to Soul Patts. It does currently pay a small dividend, however, which will likely increase long term. But its return is likely to be more skewed towards capital growth, which I think is ideal when trying to grow a portfolio long term as you are not required to pay any capital gains tax until the shares are sold. 

Altium has grown strongly recently, pushing it well into the ASX 200. The demand for its software has been growing and it is currently aiming to achieve 100,000 Altium Designer subscribers by 2025.

In addition, Altium recently noted that it is “operationally and commercially well positioned, with electronic design anticipated to be relatively resilient to weather the prevailing and unfolding market conditions”. This gives me confidence in the short term, with a tailwind provided by the Internet of Things boom and its growing market share giving me confidence for the longer term.

Foolish takeaway

I would be happy to purchase both of these companies for a child’s portfolio with a long-term view. Alternatively, if you’re looking for something requiring less ‘thought’, an investment in the BetaShares Australia 200 ETF (ASX: A200) is an option. This gives you a portion of each of the largest 200 ASX-listed companies and has a dividend reinvestment plan.

More reading

• Are rental yields better than dividend yields?
• These were the best performing ASX 200 shares last week
• How to earn $50,000 of passive income with ASX shares
• ASX shares can help millennials retire before their parents
• 2 ASX shares for a first-time investor

Motley Fool contributor Michael Tonon owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of Altium. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post Buy these ASX 200 shares for your kids today appeared first on Motley Fool Australia.

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The coronavirus pandemic has changed consumer behaviour in 2020 and beyond. Social distancing and isolation measures have shut down dine-in restaurants and deterred people from going shopping. As a result, instead of eating out or heading to the shops, consumers have opted for more convenient and, at times, cheaper alternatives.  

Here’s how e-commerce is revolutionising the food sector and the ASX shares that could benefit.

ASX supermarkets focussing on e-commerce

In early March, ASX supermarkets like Coles Group Ltd (ASX: COL) and Woolworths Group Ltd (ASX: WOW) saw unprecedented demand as consumers flocked to panic buy essentials. Some shoppers looked to bypass physically going to busy supermarkets and utilised online grocery delivery. Due to the demand, Coles and Woolworths were forced to shut down their online services.

With in-store sales starting to level out, both Coles and Woolworths have re-opened their online delivery and ‘click and collect’ services. According to the supermarket giants, the coronavirus pandemic has seen a surge in consumers adopting online grocery shopping.

In order to accommodate the expected change in consumer behaviour, Woolworths recently doubled its capacity for online grocery deliveries as the company expects $3 billion in e-commerce sales next year. The company has also hired an additional 5,000 third-party couriers to strengthen its current fleet of 800 delivery trucks in order to service more delivery orders.

Direct to consumer meal subscriptions

Subscription-based meal-kit providers such as Marley Spoon AG (ASX: MMM) have also seen a surge in consumer demand during the coronavirus pandemic. Marley Spoon, which delivers fresh ingredients directly to consumers, reported unprecedented demand, forcing the company to scale up its operations and expand its global workforce.

Marley Spoon currently operates in 3 primary regions; Australia, the US and Europe. The company recently completed a $16.6 million capital raising in order to strengthen its balance sheet and fund continued global expansion.

In an update to the market earlier this month, Marley Spoon revealed it had delivered 7.5 million meals in the first quarter of 2020 and reported its first-ever positive cash flow since its IPO.

The company also saw a 46% increase in revenue for the first quarter, with growth accelerated by the coronavirus pandemic. As a result, Marley Spoon expects to have an accelerated path to profitability and expects to achieve positive operating earnings before interest, tax, depreciation and amortisation (EBITDA) in the second quarter of 2020.

Foolish takeaway

In addition to supermarkets and subscription services, traditional takeaway operators like Domino’s Pizza Enterprises Ltd (ASX: DMP) have also reported a material surge in online demand. As a result, the company has been hiring team members in order to support the change in consumer demand.  

In my opinion, the coronavirus pandemic has irreversibly changed consumer behaviour and demand for certain goods and services. As long-term investors, this provides us with the opportunity to identify and capitalise on the trends that will become normal in the future.

I think investors should think of further shares and themes that could prosper post-pandemic and wait for positive price action before making an investment decision.

More reading

• Double your money with these high quality ASX shares
• Forget CBA and buy these top ASX dividend shares
• 4 top ASX 200 shares for blue chip investors
• 3 top ASX dividend shares you can buy today for income
• Negative interest rates coming? Here’s what it would mean for ASX shares

Motley Fool contributor Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Woolworths Limited. The Motley Fool Australia has recommended Domino’s Pizza Enterprises Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The post ASX shares that could benefit from the Internet of Food appeared first on Motley Fool Australia.

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