The hardest step in the journey of building an ASX passive income portfolio is buying your first shares. There are a lot of things in this world that one could spend $5,000 on. So entrusting that amount of cash to the whims of the stock market is a big hurdle to overcome emotionally.
That's made all the more complicated by the sheer volume of options out there to invest in.
So to smooth the journey for any aspiring investors, here are a few shares you could (in my view) happily invest in with your first $5,000 that could help you on your journey towards the ultimate ASX passive income portfolio.
It's my belief that once you deploy that first $5,000 and the passive income taps start flowing, it becomes easier and easier to invest as you can begin to tangibly count the fruits of your capital.
4 ASX shares to start the ultimate passive income portfolio with
National Australia Bank Ltd (ASX: NAB)
Too many income portfolios are dominated by the big four bank shares. But I still think the banks are worth holding for hefty passive income. It's hard to compete with the likes of NAB for consistently high, fully-franked dividend paycheques. NAB is my pick of the ASX banks right now.
I think it is one of ASX's better-run banks, considering the successful tenure of CEO Ross McEwan over the past few years. Additionally, unlike Commonwealth Bank of Australia (ASX: CBA), NAB shares offer a fully-franked dividend yield above 6% today. As such I would put $1,000 of our $5,000 into NAB shares.
Telstra Group Ltd (ASX: TLS)
I view Telstra as one of the ASX's most reliable dividend payers. The telco upheld its dividends throughout the COVID-ravaged years of 2020 and 2021. That was largely thanks to the inelastic earnings base built on mobile and Internet users around the country.
Today, Telstra shares offer a fully-franked dividend of just over 3.9%, having just upped its interim dividend to 8.5 cents per share. For a defensive passive income payer, I think Telstra is one of the best picks on the ASX, and worthy of another $1,000
Coles Group Ltd (ASX: COL)
Coles is another ASX 200 dividend share that offers investors many defensive qualities. As well as a healthy dividend yield. We all know Coles as one of the nation's most popular supermarket chains. Given Coles sells food, drinks, and other household essentials, its earning base is also highly defensive and resistant to both recessions and inflation.
This is evidenced by the fact that Coles is another company that was able to increase its dividend over both 2020 and 2021. Today, Coles shares offer a fully-franked dividend yield of 3.58% and gets our third tranche of $1,000.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
Our last share is also our first exchange-traded fund (ETF) on the list. Here we have another solid choice for aspiring income investors. Vanguard's High Yield ETF is a fund that exclusively holds ASX shares that are selected for their dividend potential. It holds a broad basket of 72 ASX income payers, including both Coles and Telstra, as well as all four of the ASX banks.
Its divine distributions typically come almost fully franked, and VHY units currently have a trailing dividend distribution yield of over 5%. For diversity and simplicity, I think this ETF is another top option for our ultimate passive income portfolio and is the destination for our last $2,000.
