There are plenty of ASX shares that pay dividends to investors. The great thing about investing in businesses is that we can start building wealth with a small amount of money.
Think about how much money is needed to invest in a property. The deposit alone can be tens of thousands of dollars, or even over a hundred thousand dollars. It can take a long time to save up that amount of money.
We still need to do a bit of saving to invest in ASX shares. Most brokers require a minimum of $500 to invest. Saving $5 a day, which is hopefully achievable for nearly everyone, would take 100 days to reach that minimum number. However, it may be better to wait to invest until the amount is closer to $1,000.
These days, we can earn a decent return on savings in the banks, so we're not missing out too much by building towards a goal.
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Building a second income with ASX dividend shares
The key wealth-building tool for most people is their job, or business if they run a business.
But, it's also possible to build another source of income from ASX shares with dividends.
Dividends are simply the portion of the profits companies pay out each year to the owners of the business (shareholders).
By saving $5 a day, someone can save $1,825 a year. I think that number, or even $1,000, would be a great starting point for a beginner investor.
A $1,825 investment with a 6% dividend yield would turn into around $110 of income. So, a few years of investing could turn into a sizeable amount of annual dividend income – hundreds of dollars a year, or even thousands.
Which ASX shares pay sizeable dividends?
Australia's largest telco Telstra Group Ltd (ASX: TLS), is starting to grow its dividend again. It's expected to pay a grossed-up yield of 6% in FY23, according to Commsec.
Another business, Coles Group Ltd (ASX: COL), is expected to pay a grossed-up dividend yield of 5.4% in FY23, according to Commsec.
Westpac Banking Corp (ASX: WBC) is projected to pay a grossed-up dividend yield of 8.5% in FY23, according to Commsec.
JB Hi-Fi Limited (ASX: JBH) shares are forecast to pay a grossed-up dividend yield of 8.75% in FY23, according to Commsec.
[fool_stock_chart ticker=ASX:JBH)
Foolish takeaway
These are just a few of the ASX dividend shares out there which can be considered for dividend income. There are also some interesting exchange-traded funds (ETFs) that distribute dividends to investors.
With just $5 a day, investors can start building that second income. In the coming years, it can turn into an impressive amount of annual cash flow.
