It's a well-known fact that many, if not most, ASX shares pay their investors dividends on a regular basis. Name a prominent blue-chip ASX share, and chances are they will be giving their investors passive income in dividend form.
That's certainly the case for everything from Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) to JB Hi-Fi Ltd (ASX: JBH) and Telstra Group Ltd (ASX: TLS).
But how much would you need to gain yourself a meaningful stream of secondary, passive income? Say $100 per week?
Well, let's answer that right now.
The answer is somewhat complicated because every ASX share pays out a different dividend and thus offers a different dividend yield. Most ASX shares pay bi-annual dividends, so investors get a paycheque every six months. But some do quarterly, or even monthly, dividends.
So $100 per week works out to be $5,200 per year.
Thus, one would need $100,000 in a dividend-paying share with a 5.2% yield to gain $100 a week in dividend income.
But let's use some real-life examples. Sure, you could start with CBA. Commonwealth Bank shares currently have a dividend yield of 4.37%. This means you would need to have around $119,000 invested to get $100 per week in income.
Or else JB Hi-Fi. It's currently boasting a dividend yield of 8.36%, meaning you would only need just over $62,000 for that same level of income.
But we'll use an ASX-wide exchange-traded fund (ETF) for our analysis, since this gives a more accurate representation of what income the entire share market produces for investors.
How much do you have to invest in ASX shares for $100 a week in passive income?
So over the past 12 months, the Vanguard Australian Shares Index ETF (ASX: VAS) has doled out $6.36 in dividend distributions per share. This index fund covers every share on the ASX 300 Index (all 300 of them), so this dividend payment is a reflection of the income that these 300 shares have generated over the past year.
On current pricing, this trailing dividend record gives this ETF a distribution yield of 7.22%. So we would have needed around $72,000 invested to get our $100 per week.
But dividends from ASX shares change all the time. To illustrate, this ETF only paid out $3.42 in dividend distributions per unit over 2021. That would work out to a yield of almost half of what we had in 2022 – 3.88%.
Thus, if that was our yield, we would need around $130,000 invested to get the same dividend cash flow.
So it's hard to pinpoint an exact number to get a consistent yield of $100 per week from ASX dividend shares. But one thing is certain: if you choose quality shares, your income will go up over the long term.
