For a shot at $5,000 a year in passive income, buy 710 shares of this ASX stock

I think every passive income investor should have this ASX dividend stock in their portfolio.

| More on:
Man holding fifty Australian Dollar banknote in his hands, symbolising dividends, symbolising dividends.

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

Is it possible to earn $5,000 a year in passive income from just 710 shares in this leading ASX dividend stock?

Indeed it is!

S&P/ASX 200 Index (ASX: XJO) financial stock Macquarie Group Ltd (ASX: MQG) counts among Australia's dividend stars.

That's partly because the company has paid shareholders two partly franked dividends every year since 2013.

And when it comes to passive income, reliability is important.

Founded in 1969, Macquarie listed on the ASX in November 2007.

Atop banking those dividends, of course, we also want to own companies whose share price goes up over time.

And Macquarie ticks that box handsomely.

While the share price came under pressure for the first three quarters of 2023 and has retraced over the past two weeks, Macquarie shares are still up 16% since 13 November, closing yesterday at $184.48 apiece.

Created with Highcharts 11.4.3Macquarie Group PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

So, let's have a look at those dividends.

Targeting $5,000 a year in passive income from Macquarie shares

Before we dig into the passive income, please note that the yields you generally see quoted are trailing yields. Future yields may be higher or lower depending on a range of company-specific and macroeconomic factors.

Also, while we're discussing just one dividend stock here, a proper income portfolio should contain at least 10 stocks. Ideally these will operate in different sectors and locations. That kind of diversity will lower the risk of our passive income stream taking a big hit if any single company or sector runs into short-term headwinds.

With that said, Macquarie paid a final dividend of $4.50 a share on 4 July. That was up 29% from the prior year's final dividend of $3.50 a share.

The ASX 200 financial stock paid an interim dividend of $2.55 on 19 December. That one was down 15% from the prior interim dividend of $3.00 a share.

The passive income dip came amid a 39% year on year fall in the company's half-year net profit after tax (NPAT), which came in at $1.415 billion.

Both of the past two dividends were franked at 40%.

A little back-of-the-napkin maths then tells us Macquarie paid out $7.05 a share in partly franked dividends over the past 12 months.

So, if we were to buy 710 shares today, that would equate to an annual passive income of $5,005 and change!

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 positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group. 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

Delighted adult man, working on a company slogan, on his laptop.
Dividend Investing

Why Macquarie predicts this high-yielding ASX 300 dividend stock is set to surge 32%

Macquarie expects some outsized returns from this ASX 300 dividend stock. Let’s find out why.

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone.
Dividend Investing

Buy Telstra and this ASX dividend stock for passive income

Macquarie thinks that these stocks could be top picks for income investors.

Read more »

A man holding a cup of coffee puts his thumb up and smiles while at laptop.
Dividend Investing

Analysts name the best ASX dividend stocks to buy this month

Let's see what they are saying about these income options.

Read more »

Australian dollar notes in the pocket of a man's jeans, symbolising dividends.
Dividend Investing

Buy these ASX dividend shares for 5% to 7% yields

Brokers think these shares could be top picks for passive income investors.

Read more »

A smiling businessman in the city looks at his phone and punches the air in celebration of good news.
Dividend Investing

Own ASX A200, NDQ, or ARMR ETFs? It's dividend payday for you!

Betashares will pay distributions to ASX ETF investors today.

Read more »

A young female ASX investor sits at her desk with her fists raised in excitement as she reads about rising ASX share prices on her laptop.
Dividend Investing

Why it's a great day for Vanguard ASX ETF investors!

It's dividend payday for investors in the VAS, VHY, VGS and other Vanguard ETFs today.

Read more »

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

This ASX 200 stock has suddenly become the highest-yielder on the index!

This stock currently has a yield of over 10%.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Dividend Investing

2 of the best ASX dividend shares to buy for income

Let's see what analysts at Bell Potter are saying about these top income stocks.

Read more »