Wouldn't it be nice to be able to give up your day job and live off the dividends paid by your ASX share investments?
While it may sound like a pipe dream, it is theoretically possible if you have sufficient capital to back up your goals.
For the purpose of this article, let's imagine you bought Woodside Energy Group Ltd (ASX: WDS) shares and wanted to retire off the dividends they provided. How much would you need to invest?
Firstly, a word of warning. Going all-in on a single share is not advisable. The proverb "don't put all your eggs in one basket" springs immediately to mind here. If something were to go wrong at the energy producer and no dividends were paid, you're not going to be receiving a pay check that year.
Nevertheless, let's move on with this example.
Living off Woodside dividends
The wage you are trying to replace with dividends will vary from person to person. But for the sake of this article, we're going to use the national median wage.
According to the RBA, the median weekly wage for Australian full-time adults is $1,250. This equates to a total of $65,000 a year.
Clearly, we're going to need to buy quite a few Woodside shares to be able to generate that amount of income. But just how many?
Well, that will depend on the size of the dividend that is paid. For this example, let's go with what analysts at Citi are forecasting from the energy giant.
According to a note from earlier this month, its analysts are expecting Woodside to pay fully franked dividends per share of $2.14 in FY 2023 and $2.34 in FY 2024.
We now need to divide the target amount by the dividends per share to come up with the number of Woodside shares we will need to own. $65,000 / $2.14 = 30,374 shares.
The bad news is that with the Woodside share price currently fetching $35.44, we're going to need over a million dollars ($1,076,454.56 to be precise) to invest to hit our goal.
The good news, though, is that with the Woodside dividend predicted to increase to $2.34 in FY 2024, you'll be getting a pay rise for doing nothing! Instead of $65,000 in dividends, you will be receiving a touch over $71,000 if Citi's forecasts prove to be accurate.
