Top ASX passive income shares to buy in August 2023

Reboot your stock market investment portfolio with some top ASX income shares that pay you to own them.

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We'd all love some passive income to ease the pain of high inflation and interest rates, right?

There's no better time to reevaluate your share portfolio and add some big dividend earners to the mix than the August reporting season when most ASX 200 companies share their full or half-year earnings reports.

How to choose? We asked our Foolish contributors for their thoughts on the ASX dividend shares they reckon are worth buying in August 2023 for long-term passive income. Here's what they came up with:

6 best ASX dividend shares for August 2023 (smallest to largest)

  • Adairs Ltd (ASX: ADH), $295.05 million
  • Supply Network Ltd (ASX: SNL), $609.20 million
  • GQG Partners Inc (ASX: GQG), $4.56 billion
  • Transurban Group (ASX: TCL), $43.07 billion
  • Westpac Banking Corp (ASX: WBC), $77.13 billion
  • BHP Group Ltd (ASX: BHP), $231.86 billion

(Market capitalisations as of market close 4 August 2023).

Why our Foolish writers love these ASX passive income stocks

Adairs Ltd

What it does: Adairs is a homewares and home furnishings retailer. The company has more than 170 stores in Australia and New Zealand. Its store brands include Adairs, Focus on Furniture, and online shop Mocka.

By Bernd Struben: Adairs looks like a strong, longer-term passive income play to me after the stock has fallen 25% in 2023. And, in a promising trend, the Adairs share price has leapt 10% since 26 July.

Adairs shares came under pressure as consumers, feeling the cost of living pinch, have cut back on discretionary spending. This saw the retailer recently report significant sales declines across its store network.

But with the RBA having paused its interest rate hikes for two consecutive months amid falling inflation, I believe consumer demand for home furnishings should rebound.

Over the past full year, Adairs shares delivered 18 cents apiece in fully franked dividends. That equates to a trailing yield of 10.5%.

Motley Fool contributor Bernd Struben does not own shares in Adairs Ltd.

Supply Network Ltd

What it does: Supply Network has operated since 1986, providing aftermarket bus and truck parts to customers across Australia and New Zealand. Those in the parts industry will know the company by its Multispares brand – the largest and most diversified independent supplier in its domain. 

By Mitchell Lawler: Selling aftermarket parts is a tough business. It takes meticulous inventory balancing and a well-managed supply chain to deliver on customer expectations at a competitive price. 

Supply Network has successfully navigated the industry within the bus and truck niche for decades. The data I can access shows continuous profitability since 2004 without a single blip, allowing a steady stream of dividends over the many years of its operations. 

The combination of excellent management, a proven track record of growth and the diligent reinvestment of capital, Supply Network is a company I believe still has a long road of passive income potential ahead of it. 

Based on the expected full-year dividend of 28 cents per share, this company's FY2023 dividend yield is roughly 3.3%.  

Motley Fool contributor Mitchell Lawler does not own shares in Supply Network Ltd.

GQG Partners Inc

What it does: GQG is one of the largest fund managers on the ASX. At 30 June 2023, it had US$104.1 billion of funds under management (FUM). While its main operations are in the United States, it's looking to expand into other regions like Canada and Australia.

By Tristan Harrison: Despite all of the uncertainty, the company continues to attract good FUM inflows. In the three months to 30 June 2023, it saw FUM inflows of US$1.2 billion. FUM growth is key for revenue and earnings growth because nearly all of its revenue comes from management fees rather than performance fees.

In terms of the dividend payout ratio and passive income, GQG says it intends to pay 90% of its distributable earnings out as a dividend each year.

Forecasts on Commsec suggest that GQG shares could pay a dividend yield of 9.25% in FY24 and 10% in FY25.

Motley Fool contributor Tristan Harrison does not own shares of GQG Partners Inc.

Transurban Group

What it does: Transurban is a toll road operator with a collection of important roads worldwide. In Australia, these include the Cross City Tunnel, Eastern Distributor, Logan Motorway, Westlink M7, and Citylink.

By James Mickleboro: I think that Transurban would be a great passive income option for investors in August. With the economic environment remaining highly uncertain, I feel that defensive options are the way to go. And you can't get much more defensive than toll roads.

Time is a precious commodity, and history shows that drivers are willing to pay to avoid traffic and cut their travel time down. And with Transurban's inflation-linked pricing set to give its earnings a boost, the company's dividends have been tipped to grow.

Citi, which has a buy rating and $16.20 price target on its shares, expects dividends per share of 58 cents in FY 2023 and then 62 cents in FY 2024. This will mean yields of 4.1% and 4.35%, respectively.

Motley Fool contributor James Mickleboro does not own shares of Transurban Group.

Westpac Banking Corp

What it does: Westpac is Australia's oldest banking and financial services group and one of the big four Australian banks. It provides a broad range of consumer, business and institutional banking and wealth management services.

By Bronwyn Allen: When I think about 'reliable passive income', I immediately think of ASX 200 bank shares.

You may not get much capital growth out of them, but they're certainly good dividend payers. As we recently reported, Westpac is expected to pay the biggest yield of all the ASX bank shares in FY24 at 7.1% fully franked. Morgans tips $1.52 to be paid in FY24.

The broker also has an add rating and a 12-month price target of $24.22. Morgans says Westpac has "the greatest potential for return on equity improvement amongst the major banks if its business transformation initiatives prove successful".

Motley Fool contributor Bronwyn Allen owns shares in Westpac Banking Corp. 

BHP Group Ltd

What it does: BHP is one of the oldest companies in Australia, having started out as Broken Hill Proprietary back in 1851. Today, BHP is one of the largest mining companies in the world, with massive operations in iron ore, copper, nickel, potash and metallurgical coal.

By Sebastian Bowen: There is a reason why BHP is a favourite passive income share amongst dividend investors. While this miner, like all resource shares, is a price taker and thus dependent on commodity prices for its earnings and dividends, its size and scale mean that it can survive in bad times and thrive when commodity prices are high.

Today, BHP offers investors a trailing yield of more than 9% (fully franked, of course). While investors would be foolish to expect that kind of yield in perpetuity, history has shown that BHP's dividends fluctuate from decent to monstrous alongside the commodity cycle.

For this reason, I think BHP is well worth a look as a part of a well-diversified income portfolio this August. 

Motley Fool contributor Sebastian Bowen does not own shares in BHP Group Ltd.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Adairs, Supply Network, and Transurban Group. The Motley Fool Australia has positions in and has recommended Adairs. The Motley Fool Australia has recommended Supply Network. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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