The S&P/ASX 200 Index (ASX: XJO) share Brickworks Limited (ASX: BKW) could be a good contender for unlocking pleasing monthly passive income in the form of dividends.
However, the business doesn't pay dividends every single month. It dishes out a payment to investors every six months. So, I think it's best to think of a monthly total as an annual figure that's divided into twelve equal parts.
Brickworks is a diversified business with a number of different segments, including Australian building products (it is Australia's biggest brickmaker), US building products, industrial property, and investments.
The 'investments' refers to owning a large chunk of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares and robotic bricklayer business FBR Ltd (ASX: FBR) shares.
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Monthly dividend income goal
To make $1,000 a month of dividend passive income, we're talking about $12,000 of annual income.
The current estimate on Commsec is that Brickworks is going to pay an annual dividend per share of 65 cents.
For investors to receive $12,000 of annual passive income, they'd need 18,462 Brickworks shares.
The Brickworks dividend could then increase to 67 cents per share in FY24 and 69 cents per share in FY25. If investors focused on the FY25 annual payment, investors would only need 17,392 shares to get the annual passive dividend income goal of $12,000.
What is the yield?
Brickworks isn't the highest-yielding ASX dividend share around but with the steady dividend growth, it can steadily increase the yield-on-cost for investors.
Based on the forecast FY23 dividend, the forward grossed-up dividend yield could be 3.9%. By FY25, the Brickworks grossed-up dividend yield is predicted to be 4.1%.
Brickworks says that its dividend is essentially funded by dividends from its Soul Pattinson shares and the net rental income from the industrial property trusts that it owns alongside Goodman Group (ASX: GMG).
Dividend reliability
Brickworks says that it has a long history of dividend growth. Indeed, the company says it has been 46 years since normal dividends were last decreased – in 1976.
Brickworks said it's "proud" of its long history of dividend growth and the "stability" it provides to shareholders.
Over the prior 20 years, it has increased its dividend at a compound annual growth rate (CAGR) of 7.1% per annum.
