ASX dividend shares offer one of the best means I know of for securing regular passive income.
And with many of the top dividend-paying ASX stocks also providing full franking credits, I'll pay a lot less tax on that passive income than I would from any interest earned in a deposit account.
Not to mention that the higher-yielding dividend shares also far outpace the interest on even the best term deposits. Though investing in shares does come with more risk than parking your money in the bank.
Looking for $50,000 in annual passive income?
Now, $50,000 a year in passive income is no chicken feed.
And I'll obviously need to invest more than that amount to earn that level of annual income.
While I won't be able to come up with the full required investment all in one go, that's fine. Investing is a long game.
So, I'll buy dividend stocks whenever I can, making sure I hold onto enough money to cover everyday expenses along with a suitable cash buffer for emergencies.
Over time I'd be sure to invest in a wide range of dividend-paying companies, spread across a wide range of sectors. This way, if one sector takes a hit, all my investments won't be majorly impacted.
One more thing to note before we look at three high-yielding S&P/ASX 200 Index (ASX: XJO) dividend stocks.
The yields we're looking at are trailing yields, derived from the past 12 months of dividend payouts. The passive income these stocks will deliver in future years could be higher or lower, depending on a range of company-specific and macroeconomic factors.
With that out of the way…
Three high-yielding ASX 200 dividend shares
Just how much I'd need to invest to secure a $50,000 passive income depends, of course, on which ASX dividend shares I target.
As mentioned, diversifying your shareholdings is highly recommended.
But to keep things on the simpler side, we'll look at three high-yielding ASX 200 dividend shares and judge each on their own merit.
First up, we have Magellan Financial Group Ltd (ASX: MFG).
The ASX 200 funds manager has had a rough year, with shares down 46% in 12 months. However, with the company working to reverse the funds under management (FUM) outflows, this retrace could provide a good long-term entry point for income investors.
Magellan paid a final dividend of 68.9 cents per share, 80% franked, on 6 September. The fund manager paid an interim dividend of 46.9 cents per share, 85% franked, on 8 March.
That works out to a full-year payout of $1.158 per share. At yesterday's closing price of $7.96, that equates to a trailing yield of 14.6%.
That means I'd need to invest $342,466 in Magellan shares for my $50,000 a year in passive income.
Next up, we have Woodside Energy Group Ltd (ASX: WDS)
The ASX 200 oil and gas stock has benefited from higher energy prices, helping drive the Woodside share price up 20% over the past 12 months.
Amid soaring profits, Woodside paid an all-time high interim dividend of $1.60 on 6 October. The company then paid an all-time high $2.154 final dividend on 5 April, both fully franked, for a full-year payout of $3.754 per share.
At yesterday's closing price of $35.09 per share, that equates to a trailing yield of 10.7%.
So, for my $50,000 a year in passive income, I'd need to invest $462,0963 in Woodside shares.
Which brings us to our third ASX 200 dividend share, Yancoal Australia Ltd (ASX: YAL).
The coal stock has seen its profits shooting higher amid record prices for thermal coal in 2022. That saw the Yancoal share price rocket 133% in 2022. So far in 2023, shares are down 11%.
Yancoal paid an interim dividend of 52.7 cents per share on 20 September and a final dividend of 70 cents per share on 28 March, both fully franked.
That equates to a full-year payout of $1.227 per share.
At yesterday's closing price of $5.08 per share, Yancoal trades on a whopping trailing yield of 24.2%.
To get my $50,000 in passive income, then, I'd need to invest $208,333 in this ASX 200 coal stock.
