Looking to build a regular annual passive income stream with ASX shares?
You're not alone.
And you've come to the right place.
The ASX offers numerous dividend-paying stocks, many with full franking credits.
In fact, the sheer number of stocks to choose from can be a bit overwhelming for newer investors.
So here are three ASX shares I'd target for passive income with a $10,000 investment today.
Please do note that the yields you generally see quoted are trailing yields. These are based on the past 12 months of dividends. Future yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.
With that said…
Tapping ASX shares for passive income
The first ASX share I'd tap for passive income is BHP Group Ltd (ASX: BHP).
The S&P/ASX 200 Index (ASX: XJO) mining giant has a lengthy track record of paying two fully franked dividends per year. While those have come down over the past year and a half amid a sliding iron ore price, BHP is still an attractive yield play in my book.
BHP paid an interim dividend of $1.364 per share on 30 March. The ASX 200 miner will pay a final dividend of $1.25 per share on 28 September. BHP stock doesn't trade ex-dividend until 7 September, so there's still time to grab that one.
That's a full-year payout of $2.614 per share.
At the current BHP share price of $43.93, that equates to a yield (partly trailing, part yet to be paid) of 6%.
The second ASX share I'd buy today for passive income is oil and gas stock Woodside Energy Group Ltd (ASX: WDS).
Like BHP, Woodside's dividends have come down slightly with lower energy prices. But like BHP, I believe the ASX 200 energy stock is still a top dividend player.
Woodside paid a final, fully franked dividend of $2.154 on 5 April. The interim dividend of $1.25 per share will be paid on 28 September. The stock trades ex-dividend this Thursday, 31 August.
That equates to a 12-month payout of $3.404 per share.
At the current Woodside share price of $38.19, this works out to a fully franked yield (partly trailing, part yet to be paid) of 8.9%.
Which brings us to the third ASX share I'd invest in for passive income, Yancoal Australia Ltd (ASX: YAL).
The coal stock paid a final fully franked dividend of 70 cents per share on 28 April. Yancoal will pay an interim dividend of 37 cents per share on 22 September. The stock trades ex-dividend on 5 September.
Yancoal's full-year dividend payout comes to $1.07 per share.
At the current Yancoal share price of $5.23, that equates to a fully franked yield (partly trailing, part yet to be paid) of 20.5%.
On to the maths
So, let's crunch some numbers.
If I invest an equal amount in each ASX share I'd be earning an average yield of 11.8%.
With my $10,000 investment that would give me an annual passive income of $1,180.
And, of course, I'll be hoping to see BHP, Woodside and Yancoal post some share price gains as well.
