Investing in S&P/ASX 200 Index (ASX: XJO) shares for passive income?
Then now might be a good time to consider reducing your weightings to ASX 200 mining shares and upping your exposure to the big oil and gas stocks.
Here's why.
Oil or iron ore?
The big three ASX 200 iron ore shares may see their popularity among passive income investors fall as their dividend payouts have dropped well below what was delivered in 2022.
Amid decreasing iron ore and copper prices, that trend has been mirrored the world over.
According to the latest Janus Henderson Global Dividend Index, global dividends increased 12% on a headline basis in the March quarter (Q1 2023). This saw global stocks shower shareholders with a record Q1 US$326.7 billion in passive income.
However, the dividends paid out by miners globally were down roughly 20% year on year in Q1.
And with the ASX so heavily influenced by mining shares, Aussie investors saw Q1 dividends fall by 6.6% on a headline basis to US$18.7 billion.
In the months ahead, ASX oil shares could be the new favourite for investors looking to secure some handy passive income.
In the outlook for Aussie dividends, Janus Henderson noted, "In Q2 large oil dividends will make up some of the gap left by the mining sector."
Which brings us to…
Two ASX 200 shares in the right sector for passive income
Woodside Energy Group Ltd (ASX: WDS) and Santos Ltd (ASX: STO) both paid out record final dividends this year.
On the back of a 160% year-on-year increase in underlying profits of US$2.5 billion, Santos boosted its final, unfranked dividend to 22.4 cents per share. That's up by 90% in Aussie dollar terms.
Atop the interim dividend of 10.9 cents per share, the ASX oil company paid out 33.3 cents per share in passive income over the past 12 months.
At the current Santos share price of $7.52, that equates to a trailing yield of 4.3%.
That's based on the interim dividend from last August. However, based on its strong recent profit results, I believe Santos' 2023 interim dividend could be significantly higher.
As for Woodside, the ASX 200 oil share paid out a record interim dividend and record final dividend, both fully franked.
This was spurred by record full-year after-tax profits of US$6.5 billion.
Woodside paid an interim dividend of $1.60 per share on 6 October and a final dividend of $2.15 per share on 5 April.
That works out to $3.75 per share of passive income.
At the current Woodside share price of $35.18, that equates to a trailing yield of 10.7%.
As with Santos, I believe Woodside's all-time high US$6.5 billion full-year net profits should roll over into another juicy interim dividend for 2023.
