Tag: Stock pick

On Monday, the S&P/ASX 200 Index (ASX: XJO) started the week with a small gain. The benchmark index rose 5 points to 9,010.9 points.

Will the market be able to build on this on Tuesday? Here are five things to watch:

ASX 200 to edge lower

The Australian share market looks set for a subdued session on Tuesday following a soft night in Europe. According to the latest SPI futures, the ASX 200 is expected to open the day 4 points lower. Wall Street was closed for Labor Day, but in Europe the FTSE fell 0.1% and the DAX dropped 0.15%.

Shares going ex-dividend

Another group of ASX 200 shares will be going ex-dividend on Tuesday and could trade lower. This includes AUB Group Ltd (ASX: AUB), BlueScope Steel Ltd (ASX: BSL), Mineral Resources Ltd (ASX: MIN), News Corporation (ASX: NWS), and Smartgroup Corporation Ltd (ASX: SIQ). Mineral Resources will be rewarding its shareholders with a fully franked 83 cents per share dividend on 30 September.

Oil prices rise

ASX 200 energy shares Beach Energy Ltd (ASX: BPT) and Santos Ltd (ASX: STO) could have a good session on Tuesday after oil prices rose overnight. According to Bloomberg, the WTI crude oil price is up 1.3% to US$92.70 a barrel and the Brent crude oil price is up 1.1% to US$97.314 a barrel. This was driven by a further escalation in US-Iran hostilities.

Gold price softens

ASX 200 gold shares Genesis Minerals Ltd (ASX: GMD) and Capricorn Metals Ltd (ASX: CMM) could have a soft session after the gold price dropped overnight. According to CNBC, the gold futures price is down 0.55% to US$4,452 an ounce. The precious metal has come under pressure due to increasing US rate hike bets.

Buy Select Harvests shares

Select Harvests Ltd (ASX: SHV) shares could be undervalued according to analysts at Bell Potter. This morning, the broker has retained its buy rating on the almond producer’s shares with an improved price target of $6.05 (from $5.30). It said: “Almond prices are strengthening and the SHV share price has lagged this move, continuing to trade below its market backed asset value of ~$5.30ps. At spot almond price levels, we would estimate FY27e EPS in a range of 53-72¢ps based on production guidance comparable to FY26e (i.e. 28,000-31,000kt), a level materially higher than the current consensus EPS level of ~37¢ps.”

The post 5 things to watch on the ASX 200 on Tuesday 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 Aub Group and Smartgroup. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

There are wide variety of S&P/ASX 200 Index (ASX: XJO) share opportunities that we can buy. When one analyst thinks a business is a buy, that’s interesting. When there’s multiple brokers that think a stock is a buy, it could be a great opportunity.

Reporting season has recently finished, giving experts the chance to look over the numbers and valuations and select some of the best opportunities on the ASX.

Below are two of the most popular ASX 200 shares among analysts.

Breville Group Ltd (ASX: BRG)

Breville is one of the world’s leading coffee machine businesses, with multiple brands including Breville, Sage, Lelit and Baratza. It also has a coffee bean business called Beanz.

According to CMC Markets, there have been seven analyst ratings on the business within the last three months. All seven of those ratings were a buy. Not many ASX 200 shares have a 100% positive rating.

The average price target of those seven ratings on the ASX share is $37.36, which implies a possible rise of 18% from where it is at the time of writing. The most optimistic price target is $41.07, suggesting a possible rise of 29%.

FY27 saw solid growth for the business, despite the headwind of US tariffs. Revenue rose 6.7% to $1.81 billion, underlying operating profit (EBITDA) grew 4.5% to $284.1 million, and net profit after tax (NPAT) rose 1.7% to $138.1 million. This allowed the business to fund a 2.7% rise in the annual dividend per share to 38 cents.

Pleasingly, the company delivered double-digit revenue growth in coffee and cooking. Its young markets of China, South Korea, Mexico and Middle East) collectively grew revenue by more than 70%.

To manage exposure to US tariffs on China, it has substantially diversified its manufacturing. More than 85% of its 120-volt product gross profit dollars have now been sourced outside China.

It described the outlook for demand across its markets as “resilient” due to premium consumers, as the company navigates macroeconomic headwinds and company-specific tailwinds, including new product launches, fast-growing new geographies, solution plays and continued store-in-store expansion.

Charter Hall Group (ASX: CHC)

Charter Hall describes itself as a leading fully integrated diversified property investment and funds management group.

The ASX share invests in a diverse portfolio of high-quality properties across core sectors of office, industrial, logistics, retail and social infrastructure.

According to CMC Invest, there have been eight analyst ratings on the business within the last three months. Six of them were a buy rating and two of them were hold.

The average price target of those eight analysts is $25.15, which implies a possible rise of 32% over the next year. The most optimistic price target is $31.07 suggests a possible rise of 63%.

Charter Hall reported in FY26 that group funds under management (FUM) grew by $10 billion over the year to $94.3 billion, which is a strong driver of earnings. FY26 operating earnings per security (OEPS) grew 26.8% to $1.032.

The ASX share is expected to grow its OEPS by 10.5% in FY27 to $1.14, with the distribution expected to grow by another 6%.

The post 2 ASX shares highly recommended to buy: Experts appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Breville 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 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.

For years, ASX healthcare shares have been the market’s rotten apple. Once viewed as a defensive safe haven, the sector became one of the ASX’s biggest laggards.

The S&P/ASX 200 Health Care Index (ASX: XHJ) is still down 33% over five years and 18% over the past 12 months. Between January 2025 and June 2026, the index lost more than half its value.

Then August happened. The ASX 200 Health Care index surged 13% over a month and now sits 44% above its June low, comfortably beating the S&P/ASX 200 Index (ASX: XJO), which gained 3% over the same period.

So, have ASX healthcare shares finally turned the corner?

CSL leads the charge

The sector entered August with expectations firmly beaten down. That proved to be a blessing.

Companies largely cleared the low bar, with cost control doing much of the heavy lifting. Healthcare was also the only sector where more companies upgraded their outlooks for the year ahead than downgraded them.

CSL Ltd (ASX: CSL) was the standout. Its shares jumped 40% in August after plasma product sales for the June half came in ahead of expectations.

More importantly, management pointed to improving gross margins at CSL Behring, the plasma business that has caused plenty of headaches in recent years. UBS now believes the worst could be behind CSL ahead of its CEO transition in 2027.

Other healthcare heavyweights also delivered. Ansell Ltd (ASX: ANN) jumped 23% after beating expectations, with its FY27 guidance implying double-digit earnings-per-share growth at the midpoint.

Ramsay Health Care Ltd (ASX: RHC) gained 16% after a better-than-expected FY26 result. Its new management team expects further margin expansion in FY27, helped by more predictable private health insurance agreements, better operating theatre utilisation and procurement savings.

The rally wasn’t limited to those three names. Eight of the sector’s 10 largest ASX healthcare shares finished August higher. Cochlear Ltd (ASX: COH) climbed 13%, Telix Pharmaceuticals Ltd (ASX: TLX) rose 10%, and ResMed Inc (ASX: RMD) gained close to 10%.

Can the rebound continue?

This is where things get interesting. August was impressive, but FY27 will be the real test.

Management teams are generally optimistic, yet analysts aren’t quite as convinced. According to a recent Macquarie note, consensus FY27 earnings forecasts for the sector were actually cut by more than 2% during August.

There’s another problem: valuations have rebounded alongside share prices. The bargain-basement appeal that existed at June’s lows has largely disappeared. Investors are now paying more for the turnaround they hope is coming.

The August reporting season suggests CSL and several of its peers may finally be back on firmer ground. But after such a powerful rebound, the easy part may already be over.

Now, ASX healthcare shares need to deliver.

The post CSL led the ASX healthcare shares rebound. Can it continue? appeared first on The Motley Fool Australia.

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Motley Fool contributor Marc Van Dinther 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 CSL, Cochlear, ResMed, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Ansell, CSL, Cochlear, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Recently, investors have been searching for the optimal strategy to gain exposure to the artificial intelligence buildout. 

This has evolved from direct exposure through AI companies to the infrastructure that supports AI rather than in AI software itself.

The AI revolution and the ASX 

Because Australia has relatively few direct AI leaders comparable to Nvidia Corp (NASDAQ: NVDA) or Microsoft Corp (NASDAQ: MSFT), investors have focused on:

• Data-centre operators
• Electricity generators and infrastructure companies
• Mining companies with exposure to commodities needed to build and power data centres, particularly copper and uranium. 

ASX investors have also turned to thematic ASX ETFs that target these companies. 

Overall, the ASX AI investment strategy has increasingly become a “picks and shovels” approach: rather than trying to identify Australia’s next major AI software company, investors are targeting the physical infrastructure and resources needed to power and expand the global AI boom.

Adrad Holdings Ltd (ASX: AHL) has been identified as a potential beneficiary of the AI boom.

Company overview

Adrad is an Australian-based business specialising in the design, manufacture, importation and distribution of heat transfer solutions for the automotive and industrial markets in Australia, New Zealand and Southeast Asia.

Its stock price has risen over 50% year to date. 

Its strong rise in 2026 is closely connected to AI/data-centre infrastructure, but there is more to the story. AHL has exposure to the growing need for cooling systems for data centres, as well as mining, power generation and other heavy-industry applications.

Big upside for this ASX stock 

A fresh report from the team at Bell Potter suggests this ASX stock could be a long-term beneficiary of the AI boom. 

Bell Potter is increasingly positive on Adrad because of its exposure to the rapidly growing data-centre and AI infrastructure market. 

The company has responded to growing demand by doubling its Australian data-centre capacity and expanding manufacturing in Thailand, with the additional capacity already generating new customer orders. 

Bell Potter therefore expects this data-centre investment to support Adrad’s revenue and earnings growth over the medium term. 

While its FY27 forecasts remain unchanged, Bell Potter has upgraded its FY28 and FY29 expectations, increasing revenue forecasts by 3% and 5% and EPS forecasts by 9% and 13%, respectively. 

It now expects mid-to-high single-digit revenue growth and mid-to-high teens EPS growth in FY28 and FY29, respectively.

The broker has a buy recommendation on this ASX stock as well as an upgraded price target of $1.80 (previously $1.40). 

From yesterday’s closing price, this indicates approximately 14% upside. 

The post This ASX stock could be a surprise winner of the AI boom 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 positions in and has recommended Microsoft and Nvidia. The Motley Fool Australia has recommended Microsoft and Nvidia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Flight Centre Travel Group Ltd (ASX: FLT) and Commonwealth Bank of Australia (ASX: CBA) shares have both lost ground over the past full year, while the S&P/ASX 200 Index (ASX: XJO) has gained 1.8%.

On Monday, Flight Centre shares were trading for $11.54 apiece. That sees shares in the ASX 200 travel stock down 6% over 12 months.

Though that doesn’t include the two fully-franked dividends totalling 42 cents a share Flight Centre paid eligible stockholders over this time. Flight Centre trades on a full-franked 3.6% dividend yield.

As for CommBank, shares in the ASX 200 bank stock were recently trading for $161.06 each. This sees the CBA share price down 4.3% over 12 months.

CBA also paid two fully-franked dividends over the past year, totalling $5.05 a share. CBA stock trades on a 3.1% fully-franked trailing dividend yield.

And looking ahead, Medallion Financial Group’s Stuart Bromley believes both big-name ASX 200 stocks are likely to keep underperforming in the upcoming months (courtesy of The Bull).

Here’s why.

Time to sell CBA shares?

“CBA remains Australia’s highest quality major bank,” Bromley said.

He noted:

The company posted cash net profit after tax of $10.982 billion in full year 2026, up 7 per cent on the prior corresponding period. The full year dividend of $5.05, fully franked, is up 4 per cent.

However, Bromley issued a sell recommendation on CBA shares.

He explained:

Despite the strong result, we believe the valuation is stretched, particularly as higher interest rates weigh on housing activity and credit growth. CBA shares were recently trading at historically elevated valuations compared to global peers. Better valuation opportunities exist elsewhere.

As for CBA’s passive income potential, Bromley concluded, “The recent dividend yield of 3.16 per cent lacks appeal.”

Which brings us back to…

Time to exit Flight Centre shares?

Atop his bearish outlook for CBA shares, Bromley also issued a sell recommendation on Flight Centre shares.

According to Bromley:

The global travel agency group delivered record total transaction volumes in full year 2026. However, underlying profit before tax of $278 million declined by 4 per cent as Middle East disruption weighed heavily on the leisure business.

We view geopolitical uncertainty, airline capacity constraints and softer consumer conditions as headwinds. We see better risk-adjusted opportunities elsewhere.

Commenting on the impact of the Iran war last month, Flight Centre CEO, Graham Turner said:

In Q4, the Middle East conflict disrupted travel patterns, That was an external shock, not a change in the leisure business’s underlying strength, and momentum is already returning, with July TTV at record levels for the month.

Flight Centre shares closed down 7.4% when the company reported those results on 26 August.

The post Sell alert! Why this expert is calling time on Flight Centre and CBA shares appeared first on The Motley Fool Australia.

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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 recommended Flight Centre Travel Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

ASX consumer staples stock Select Harvests Ltd (ASX: SHV) is set to benefit from tailwinds over the next 12 months according to a new report from Bell Potter. 

Select Harvests is an integrated grower, processor and marketer of almonds owning and operating farming and processing assets in Australia. 

It offers a vertically integrated model with core capabilities in farming, processing and marketing.

The company has experienced some significant volatility over the past 12 months. Its share price has fluctuated between highs of $5.20 and lows of $3.50. 

It currently sits on the high end of this range, closing trading yesterday at $4.90. 

However, the team at Bell Potter believe it could be set for significant growth in the next year. 

Almond prices continue to strengthen 

According to a new report from Bell Potter, almond prices have continued to strengthen, implying upside to consensus FY27e expectations. 

US almond prices are up around 20% since SHV’s 1H26 results, driven by smaller kernels and expectations that US production will again fall short of USDA forecasts.

While the price increase is unlikely to have much impact on FY26 earnings, it significantly improves the FY27 outlook. 

Bell Potter believes consensus pricing of around A$10/kg is too conservative compared with current spot prices of about A$12/kg.

Input costs are starting to ease, although Bell Potter remains cautious because the company has already locked in fertiliser costs for FY27 and water costs/requirements may remain elevated due to the drier seasonal outlook. They expect costs to move closer to long-term averages from FY28.

Based on this guidance, Bell Potter has increased its almond price assumptions, resulting in FY27 EPS being upgraded by 20% and FY28 EPS by 5%. 

Target price rises 

The broker has subsequently raised its target price to $6.05 (previously $5.30). 

From current levels, this indicates an upside potential of 23% for this ASX consumer staples stock.

Almond prices are strengthening and the SHV share price has lagged this move, continuing to trade below its market backed asset value of ~$5.30ps. At spot almond price levels, we would estimate FY27e EPS in a range of 53-72¢ps based on production guidance comparable to FY26e (i.e. 28,000-31,000kt), a level materially higher than the current consensus EPS level of ~37¢ps. The longer-term almond thematic has always been the key attraction to SHV, however, there is the scope for a near term sugar hit should the current positive market backdrop remain in place.

The post This ASX consumer staples stock is tipped to rise 23%: Expert 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.

Few ASX blue-chip stocks have delivered a more dramatic rollercoaster ride than WiseTech Global Ltd (ASX: WTC) shares.

The logistics software company’s shares have traded as high as $135 and as low as $28.76 — an almost 80% peak-to-trough collapse.

At around $36.26, the stock remains near its lows after falling roughly 62% over the past year. Yet several brokers continue to see substantial upside.

So, what are they seeing that the market isn’t?

The rally that ran out of steam

For much of August, WiseTech shares looked ready for a comeback.

The stock jumped 25% during the first three weeks, reaching $45.47 on 25 August. Then the FY26 result arrived, and the recovery quickly lost momentum.

Since reporting, shares have fallen around 20%, taking them a long way from the $100-plus levels seen a year ago.

But the numbers themselves weren’t disastrous. WiseTech reported a 46% increase in EBITDA to US$558.4 million for FY26. That landed within management’s US$550 million to US$585 million guidance range, although it fell slightly below the US$569.5 million market forecast.

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

A global leader with a credibility problem

The price collapse of WiseTech shares isn’t simply a story 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.

That gives the company exposure to powerful long-term trends, including the digitalisation of global trade and increasing complexity across international supply chains.

The bigger challenges have been investor confidence, governance concerns and regulatory issues. That’s why FY27 execution matters so much.

What do brokers think?

Several brokers remain firmly bullish.

Morgans retained its buy rating with a $62.50 price target, while Morgan Stanley maintained its buy rating and $70 target. That represents potential upside of almost 93% from $36.26.

Bell Potter also retained its buy rating on WiseTech shares, despite cutting its target from $71.75 to $65.

In our view the issue with the result was the guidance and, in particular, the expected 45%/55% H1/H2 split in CargoWise revenue this year which implies mid single digit growth in H1 and strong double digit growth in H2. While we reflect this skew in our forecasts, we adjust for the risk in our valuation by reducing the multiples we apply in the PE ratio and EV/EBITDA and also increasing the WACC we apply in the DCF. The net result is a 9% decrease in our TP to $65.00 and we retain the BUY.

Citi lifted its target from $55.05 to $58.75, while UBS reduced its target from $65 to $56 but retained its buy recommendation. Macquarie has an outperform rating and $48.20 target.

But not everyone is convinced. Jefferies downgraded WiseTech to hold with a $45 target, while JPMorgan also has a hold rating and $40 target.

At $36.26, that enormous spread tells investors something important: the market remains deeply divided.

Foolish takeaway

The bull case rests on WiseTech converting its strong underlying position into faster growth and expanding margins. The bear case of WiseTech shares is that investor concerns and slower near-term growth deserve a much lower valuation.

For now, brokers appear more optimistic than the share price suggests. But WiseTech will need to deliver on its FY27 ambitions before the bulls can claim victory.

The post WiseTech shares are down 62%. Why are brokers still bullish? 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.

The recent ASX reporting season “showed some softness” but was marginally better than feared, the analysts at Canaccord Genuity (CG) wrote in a recent research note.

The team at CG has identified four major ASX stocks they believe will do well over the next period, despite favouring global equities over domestic over the next six to 12 months.

They said earnings growth over the most recent reporting season looks set to come in at around 12%, while estimates have been trimmed marginally for the current year to about 11% growth, “which looks optimistic to [CG] given softening economic conditions”.

With this context in mind, let’s see which stocks they like.

Hub24 Ltd (ASX: HUB)

Hub24 shares are almost 30% down over a 12-month period, which CG has identified as a potential entry point. CG said that while there has been a temporary softness of funds inflows there, “remains a high-quality structural growth story”.

The company is trading well below its five year average, the CG team said.

They added:

This was driven by softer FY27 platform net flows, reflecting discretionary investment (non-super) pullback amid Federal Budget changes rather than advisers leaving the platform, with superannuation flows continuing to grow. FY28 platform FUA guidance of $186- 200bn implies ~17% growth, reinforcing the structural trajectory.  

Telix Pharmaceuticals Ltd (ASX: TLX)

The CG team said that while the Telix share price has recovered well over the past month, they continue to see further substantial valuation upside.

They believe the shares remain as much as 70% undervalued, with the next six months “catalyst rich”.

They added:

Two consecutive beats on Precision Medicine revenue, with Q2 sales coming in 10% above consensus, point to upside risk to FY26 revenue. Complementing its commercial momentum, the pipeline has had strong recent momentum and remains catalyst-rich, with the resubmission of Zircaix, the expected approval and launch of Pixclara, and enrolment progress and early efficacy data from the TLX591 ProsACT Part 2 trial all expected this year.

ResMed Inc (ASX: RMD)

The CG team said investor interest was returning to healthcare following the reporting season and that would benefit ResMed which is currently deeply discounted.

They added that CPAP device demand remained strong, and they believed that fears to ResMed’s business from GLP-1 weight loss drugs were overdone.

They added:

Successive alternatives have failed to displace CPAP as the primary treatment for sleep apnea, while real-world data show GLP-1 users are more likely to initiate and remain on therapy. RMD’s investment in diagnostic and referral channels adds further growth potential.

Goodman Group Ltd (ASX: GMG)

The CG team said that the market continues to undervalue Goodman Group’s data centre opportunity, “despite a difficult-to-replicate global power bank providing significant runway to data infrastructure demand”.

They said the company was trading at a similar valuation to the ASX All Industrials, despite having more attractive metrics.

They added:

The group’s development work in progress surged 53% in FY26 to $19.7bn, with data centres now 78% of the pipeline, underpinning a significant uplift to the group’s yield on cost, implying strong development margins. The key near-term catalysts will include major lease announcements, which should crystallise valuation uplifts and could trigger performance fees.

The post 4 high conviction ASX stock picks from Canaccord Genuity appeared first on The Motley Fool Australia.

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Motley Fool contributor Cameron England has positions in Hub24 and Telix Pharmaceuticals. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goodman Group, Hub24, ResMed, and Telix Pharmaceuticals. The Motley Fool Australia has positions in and has recommended ResMed. The Motley Fool Australia has recommended Goodman Group, Hub24, and Telix Pharmaceuticals. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

To earn $10,000 a year in passive income from a $10,000 investment in ASX shares, you’d need to be getting a 100% dividend yield.

And if you know any ASX companies offering a reliable 100% yield, well, drop us a line.

But that doesn’t mean you can’t get to that $10,000 annual passive income stream from your ASX share investment.

It will just take some patience and time.

Tapping into the magic of compounding for long-term passive income

When you’re buying ASX shares, it’s worth taking some advice from legendary investor Warren Buffett.

And when it comes to long-term investing, Buffett famously said, “I don’t invest to make a quick profit. I buy stocks with the mindset that the market might shut down tomorrow and stay closed for five years.”

Or, more succinctly, Warren Buffett once quipped, “Our favourite holding period is forever.”

Now, rest assured, you won’t have to wait forever to see your $10,000 investment in ASX shares deliver $10,000 a year in passive income.

I believe you can reasonably expect to earn a long-term yield of at least 5.2% from quality ASX dividend stocks.

S&P/ASX 200 Index (ASX: XJO) energy giant Woodside Energy Group Ltd (ASX: WDS) shares, for example, trade on a 5.1% fully-franked dividend yield.

Shares in Aussie freight operator Aurizon Holdings Ltd (ASX: AZJ) trade on a 6.2% dividend yield, 90% franked.

And ASX 200 bank stock Westpac Banking Corp (ASX: WBC) trades on a 4.4% fully-franked dividend yield.

Using these three as our sample, if you bought an equal amount in each stock, you could expect to earn a 5.2% dividend yield.

To the maths!

So, in the first year after your initial $10,000 investment, you could expect to earn $520 in passive income.

To achieve your $10,000 in annual passive income at a 5.2% yield, you’ll need to own $192,308 in ASX dividend shares.

Bearing Warren Buffett’s advice in mind, we’ll be patient and tap into the magic of compounding.

Let’s take the S&P/ASX 200 Gross Total Return Index (ASX: XJT) – which includes all cash dividends reinvested on the ex-dividend date – as our benchmark for the types of returns you might expect from that initial investment.

Over the last five years, the ASX 200 total return index has gained 46%. That equates to an annualised return of approximately 7.9%.

Now we won’t try to beat those returns. But we certainly hope to match them.

So, if you sit tight and leave that $10,000 invested for 38 years, you should have $199,287.

At a 5.2% yield, that will give you an annual passive income of $10,363.

The post $10,000 a year in passive income buying just $10k worth of ASX shares? Here’s how I’d go about it appeared first on The Motley Fool Australia.

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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.

In Australia, superannuation is a popular tool to build wealth for retirement.

It’s tax effective too, and you can also use your superannuation to build a passive income to live off in your retirement years.

But by investing your superannuation wisely, you will benefit from lower tax rates, compound growth, and then eventually a retirement lifestyle boosted by a tax-free passive income.

The question is, how much do you actually need in your superannuation to receive the passive income you want?

Let’s break it down, using $10,000 per month as an example.

How much superannuation do I need to earn $10,000 of monthly passive income?

First, you need to work out what $10,000 in passive income every month totals over the year. 

So, $10,000 x 12 = $120,000.

Then you need to divide your annual passive income by the dividend yield of your overall portfolio. 

For example, $120,000 ÷ 2% = $6 million (that’s the portfolio size you’d need).

The only catch is that the answer varies depending on your dividend yield.

That means a super portfolio with a dividend yield of around 4% only needs to be half the size of one with a dividend yield of around 2% to generate the same level of passive income.

Which is good news because a $6 million superannuation balance is out of reach for the majority of Australians.

Ok, so how much do I need to earn $10,000 off a 4%, 5% or 6% yielding portfolio?

We already know what portfolio size you’d need to earn $12,000 per year (the equivalent of $10,000 per month) off a 2% yielding account.

But if your overall portfolio has a slightly higher dividend yield of around 4%, you’ll need a balance of around $3 million to earn the same $120,000 per year in passive income.

If the yield of your portfolio is higher still, at around 5% for example, your balance would need to be closer to $2.4 million to earn the same dividend income.

For a 6% yielding portfolio, you’d need a superannuation balance closer to $2 million to earn the same amount again.

And so on…

You’d still earn $120,000 per year in passive income from each of these superannuation balance sizes.

I’m aiming for a 5% yielding superannuation portfolio, which ASX shares can I invest in?

To earn a $120,000 passive income off a 5% yielding portfolio, you’d need around $2.4 million saved. 

But note, if you want a portfolio yielding around 5%, it doesn’t mean that every investment in your portfolio has to yield that level. It can be a combination that yields 5% overall.

These are my top picks.

Defensive shares like Telstra Group Ltd (ASX: TLS), Sonic Healthcare Ltd (ASX: SHL), Origin Energy Ltd (ASX: ORG) or Amcor PLC (ASX: AMC) are a solid choice for income-seeking investors. These all yield around the 5% to 6% level, at the time of writing.

Non-discretionary ASX consumer staples stocks are also naturally defensive, but many of them yield slightly less. Supermarket giants like Woolworths Group Ltd (ASX: WOW) and Coles Group Ltd (ASX: COL) can generate stable cash flow across all phases of the economic cycle. This translates to consistent dividends for shareholders. These shares pay around 3%, at the time of writing. 

Then there are your popular ASX mining shares. These are more cyclical, but such stocks usually rebound strongly during recovery. BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG) and Rio Tinto Ltd (ASX: RIO) are popular options. These yield anywhere between 3.5% and 6.5% at the time of writing. 

The post How much do I need in my superannuation to earn $10,000 passive income every month? appeared first on The Motley Fool Australia.

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• How I’d target $5,000 a year in passive income from ASX shares
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• These ASX shares benefit from a high Aussie dollar

Motley Fool contributor Samantha Menzies 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 positions in and has recommended Amcor Plc and Telstra Group. The Motley Fool Australia has recommended BHP Group and Sonic Healthcare. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.