Retirees: How you could earn $705 a month in ASX dividends with less than $100K in savings

Here's how ASX dividend shares can be impressive dividend payers.

| More on:
A woman looks excited as she fans out a wad of Aussie $100 notes.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • Retirees can utilise ASX dividend shares to provide solid passive income
  • Metcash, Shaver Shop and GQG are all expected to pay high dividend yields in the next few years
  • Investors could unlock $700 of monthly passive dividend income by investing around $85,000 across these names

Retirees may like to consider ASX dividend shares for passive income in retirement because of a number of different reasons.

For starters, ASX dividend shares can pay investors an impressive dividend yield. People can use stocks to unlock a lot more sustainable cash flow than other types of assets may be capable of.

These businesses can also achieve capital growth over the long term, adding to the returns for investors. Retirees can build a portfolio of names that can provide diversification.

There has been a lot of volatility since the start of 2022. Lower share prices give investors the opportunity to buy these businesses with a better yield, and hopefully, there's a better chance of capital growth in the short term and long term.

I think retirees could utilise these ASX dividend shares to create strong annual passive income.

Shaver Shop Group Ltd (ASX: SSG)

Shaver Shop is not exactly a retail juggernaut, but it aims to be the leader when it comes to hair removal in Australia.

I think it's in a good section of the retail market – whether the economy is booming or not, hair removal products could remain in demand.

The ASX dividend share has been steadily growing its scale, which is helping improve profitability. Shaver Shop has increased its dividend each year since it started paying a dividend in 2017. That's a good record in my opinion.

Estimates on Commsec suggest the business could pay an annual dividend per share of 10.2 cents in FY23, which would be a grossed-up dividend yield of 13.5%. Further dividend growth is expected in FY24 and FY25.

GQG Partners Inc (ASX: GQG)

This is a global fund manager which offers investors a number of different investment strategies around the world.

GQG has committed to paying a quarterly dividend of 90% of its distributable earnings. This can enable the business to have a large dividend yield.

It helps that the fund manager is seeing good funds under management (FUM) inflows, while the investment funds are delivering long-term outperformance. If FUM rises, then earnings can grow and that means the dividend can grow as well.

Commsec numbers suggest that GQG could pay an annual dividend per share of 12.1 cents in 2023. This translates into a forward dividend yield of 8.3%.

Metcash Limited (ASX: MTS)

Metcash is a diversified business. It has a hardware division that owns the brands of Mitre 10, Total Tools and Home Timber & Hardware. The ASX dividend share supplies IGA supermarkets around Australia. It also supplies independent liquor retailers including Cellarbrations, Thirsty Camel, The Bottle-O, IGA Liquor, and Porters Liquor.

The business has seen a shift in shopper behaviour since COVID-19, with an increase in local neighbourhood purchasing.

Metcash continues to invest in its business to become even better – it's focused on areas like loyalty, digital and e-commerce, data, network optimisation and development, as well as addressing legacy technology through 'project horizon'.

The ASX dividend share has grown its dividend each year since 2020. Commsec numbers suggest it could pay an annual dividend per share of 22.1 cents in FY23. This would be a grossed-up dividend yield of 8.1%.

Foolish takeaway

Investing a total of $85,000 spread across these three ASX dividend shares would earn a total of $8,466 of annual dividend income, which amounts to monthly dividends of $705. I think that would be a very promising amount for retirees.

Motley Fool contributor Tristan Harrison 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 Metcash. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A male oil and gas mechanic wearing a white hardhat walks along a steel platform above a series of gas pipes in a gas plant
Dividend Investing

Should I buy Santos shares for dividend income?

Santos shares have been steadily upping their dividends since 2020.

Read more »

A businessman lights up the fifth star in a lineup, indicating positive share price for a top performer
Dividend Investing

2 of the best ASX dividend shares to buy in December

Bell Potter rates these dividend shares very highly. Let's see why.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

Analysts expect 5% to 8% dividend yields from these ASX stocks

Here's why these dividend stocks could be great options for income investors today.

Read more »

Male hands holding Australian dollar banknotes, symbolising dividends.
Dividend Investing

5 ASX 200 shares with ex-dividend dates next week

Do you own any of these shares that are primed to pay out?

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Dividend Investing

Invested $5,000 in Telstra shares in 2021? Here's how much passive income you've already earned

Atop the share price gains, how much passive income have investors earned from their Telstra stock?

Read more »

Happy couple enjoying ice cream in retirement.
Dividend Investing

Buy Telstra and this ASX dividend stock now

Analysts are saying good things about these dividend stocks. Let's see why they are bullish.

Read more »

A smiling woman with a handful of $100 notes, indicating strong dividend payments
Dividend Investing

Invest $20,000 in 2 ASX dividend shares for $1,500 in passive income

Analysts expect big yields from these passive income shares over the next couple of years.

Read more »

Middle age caucasian man smiling confident drinking coffee at home.
Dividend Investing

These buy-rated ASX 200 dividend shares offer 4.6% to 10% yields

Income investors might want to check out these dividend shares that brokers rate as buys.

Read more »