Investing in ASX shares is a powerful way to increase your income in 2020. The S&P/ASX 200 Index (ASX: XJO) has slumped 20.34% lower this year and many index members are down double-digits.
That means that Aussie shares could be undervalued and in the buy zone right now. When times are tough, ASX dividend shares can help to increase your income with regular distributions.
How to increase your income with ASX shares
A $5,000 investment can go a long way if you choose wisely. Compounded at an average rate of 5% per year, that $5,000 could turn into $21,609.71 in 30 years time. However, unless you're reinvesting dividends from your ASX shares, it's unlikely that your rate of return will be 5% per year.
That being said, you can still increase your income with just $5,000. Take a company like Fortescue Metals Group Limited (ASX: FMG), which is yielding 6.13% right now.
Fortescue shares are trading at a price-to-earnings (P/E) ratio of just 4.55 times. That means you are paying $4.55 per $1 of Fortescue right now. Given the mining sector could weather the COVID-19 storm thanks to increased Chinese demand and investment in Aussie infrastructure, Fortescue could be good value at the moment.
However, you may not want to put all of your investment eggs in one basket. That means you could look at a couple of other ASX dividend shares to increase your income in 2020.
I like the look of Scentre Group (ASX: SCG) shares right now. Scentre shares are down 45.36% this year but things could be looking up. Australia is looking at winding back COVID-19 restrictions and retail stores could soon be back in business.
That's good news for a corporate landlord like Scentre, which owns and operates Westfield shopping centres across Australia and New Zealand. Scentre shares are yielding 9.06% per year and could be undervalued at $2.12 per share right now.
Foolish takeaway
There are many ways to increase your income in 2020 and ASX dividend shares are an easy way to do it.
Whatever you choose to do, make sure you invest for the long-term and realise that dividends can fluctuate from year to year. However, if you can pick a solid dividend share or two for a cheap price, that could really help your income in the years to come.
