S&P/ASX 200 Index (ASX: XJO) shares offer a unique opportunity for Australians seeking passive income.
Many of the listed blue-chip companies pay fully franked dividends with inflation-beating yields.
Now, there are no guarantees that the yields of these ASX 200 shares offered over the past 12 months will remain the same over the coming 12 months. As we're talking about trailing yields here, the future yields may, of course, be higher or lower.
Ideally, we invest in companies that are growing their revenues and profits and hence will maintain or increase their dividends, alongside potential share price gains.
With that in mind, here's how I'd invest in three ASX 200 shares, each paying fully franked dividends, to generate $20 a day in passive income. Or a handy $7,300 per year.
$20 a day in passive income from these three ASX 200 shares
First up we have iron ore giant Fortescue Metals Group Ltd (ASX: FMG).
2021 saw the ASX 200 share payout record dividends amid a soaring iron ore price and heady profits. While that's come down some, the past 12 months have still been historically strong in regard to dividend payouts.
Fortescue paid a final dividend of $1.21 per share on 29 September and an interim dividend of 75 cents per share on 29 March for a total payout of $1.96 per share.
At the current price of $22.29, Fortescue trades on a trailing yield of 8.8%. The Fortescue share price is up 3% over the past year.
The second ASX 200 share I'd buy for passive income is ANZ Group Holdings Ltd (ASX: ANZ).
The big four bank has a lengthy track record of reliable dividend payments. ANZ paid an interim dividend of 72 cents per share on 1 July and a final dividend of 74 cents per share on 15 December for a total payout of $1.46 per share.
At the current price of $23.90, ANZ shares offer a trailing yield of 6.1%. The ANZ share price is down 12% over the past year.
And the final ASX 200 share I'd aim to get my $20 a day in passive income from is Whitehaven Coal Ltd (ASX: WHC).
Buoyed by soaring coal prices, Whitehaven paid out a record interim dividend of 32 cents per share on 10 March. The coal miner paid its final dividend of 40 cents per share back on 16 September, bringing its total payouts for the 12 months to 72 cents per share.
At the current share price of $6.89, Whitehaven pays a trailing yield of 10.5%. The Whitehaven share price is up 51% over the past year.
How many shares do I need for $20 a day in passive income?
Assuming I buy an equal amount of stock in each of the ASX 200 shares above, my average trailing yield works out to 8.5%.
That means to secure my $20 a day ($7,300 per year) in passive income with potential tax benefits I'd need to invest $85,882 and change.
Now, that's a big investment to make all in one go.
But that's okay.
Investing is a long game.
With my eye fixed on that $20 a day in passive income, I'd put aside some money each month to invest in ASX 200 dividend shares.
In time, I'll achieve my goal.
