We all want a healthy work-life balance. Most of us also hope for a future where we can work less while earning more. One powerful way to achieve these goals is to invest in top ASX passive income shares.
And with the gift of compounding also at our command, the earlier we start investing, the more we'll have in the treasure chest later.
To help launch you on this road to long-term riches, we asked our Foolish writers which ASX income shares they reckon could be worth investing in now for passive income later.
Here is what the team came up with:
6 best ASX dividend shares for September 2023 (smallest to largest)
- Shaver Shop Group Ltd (ASX: SSG), $149.36 million
- Smartgroup Corporation Ltd (ASX: SIQ) $1.12 billion
- Yancoal Australia Ltd (ASX: YAL), $7.32 billion
- Endeavour Group Ltd (ASX: EDV), $9.81 billion
- Telstra Group Ltd (ASX: TLS), $46.56 billion
- ANZ Group Holdings Ltd (ASX: ANZ), $75.49 billion
(Market capitalisations as of 1 September 2023).
Why our Foolish writers love these ASX passive income stocks
Shaver Shop Group Ltd
What it does: Shaver Shop operates over 120 stores across Australia and New Zealand. It sells a selection of hair removal products, with approximately 57% of gross profit derived from lines exclusively sold at those stores. It also sells products across oral care, hair care, massage, air treatment, and beauty categories.
By Tristan Harrison: I think Shaver Shop demonstrated solid and resilient performance in FY23, with sales growing 0.8% to $224.5 million and net profit after tax (NPAT) increasing 0.8% to $16.8 million. The company increased its dividend per share by 2% to 10.2 cents.
That may not sound like a large increase in the dividend, but it represents a very large grossed-up dividend yield of 12.8%. Paying a good dividend is one of the company's main focuses.
It's looking to maintain a good gross profit margin during this period, which should help maintain a good level of overall profitability to help it keep paying a strong dividend.
Motley Fool contributor Tristan Harrison does not own shares of Shaver Shop Group Ltd.
Smartgroup Corporation Ltd
What it does: Serving 385,000 active customers, Smartgroup is a market leader in salary packaging, fleet management, and novated lease solutions across Australia. The company operates through several brands such as Smartsalary, Smartleasing, and Smartfleet.
By Mitchell Lawler: If I were looking for a passive income provider, I'd want a company that ticks two important boxes: high profitability and opportunity for growth.
Often investors fall into the trap of buying shares in businesses with high dividend yields. However, if those dividends aren't growing over time, they won't remain attractive for long.
I believe a large runway for business growth is imperative to secure generous dividends into the future. For Smartgroup, this expanding market opportunity could come from growth in the novated leasing of electric vehicles, in my opinion.
As it stands, this ASX share is offering a dividend yield of 5.3%. The latest fully franked final dividend has an ex-dividend date of 7 September, paying 15.5 cents per share to eligible shareholders on 22 September.
Motley Fool contributor Mitchell Lawler owns shares in Smartgroup Corporation Ltd.
Yancoal Australia Ltd
What it does: Yancoal is a low-cost Aussie coal producer in the global seaborne market. The miner produces high-quality thermal and semi-soft coking coal. It operates or participates in 11 coal mines across New South Wales, Queensland, and Western Australia.
By Bernd Struben: When it comes to passive income, Yancoal is hard to beat in my book.
Coal prices have come down from 2022's record highs. But prices look to be finding support around current levels. Those lower realised coal prices were reflected in Yancoal's slightly scaled-back interim dividend.
Management declared a fully franked interim dividend of 37 cents per share. At Friday's closing price of $5.52 per share, that represents a pending interim dividend yield of 6.7%. If you want to grab that payout, you'll need to own shares at market close on 4 September. That income should hit your bank account on 22 September.
Adding in the fully franked dividend of 70 cents per share and Yancoal's full-year payout comes to $1.07 per share. At Friday's closing price, that equates to a juicy yield (part trailing, part pending) of 19.3%.
Motley Fool contributor Bernd Struben does not own shares in Yancoal Australia Ltd.
Endeavour Group Ltd
What it does: Endeavour is the owner and operator of Australia's largest retail drinks network under the Dan Murphy's and BWS brands. It also runs the country's largest portfolio of licensed hotels.
By James Mickleboro: The Endeavour share price has taken a tumble over the last 12 months. While this is disappointing, I think it has created a buying opportunity. Especially given how the company has a commanding 40% share (and growing) of a defensive alcohol retail market.
In addition, the company's My Dan's loyalty program is helping cement its leadership position. It increased by 15.6% to 5.2 million active members with a record scan rate of 79% in FY 2023.
But what about income? Goldman Sachs is forecasting fully franked dividends per share of 22 cents in FY 2024 and 24 cents in FY 2025. This represents yields of 4% and 4.3%. Goldman also sees plenty of upside with its buy rating and $6.90 price target.
Motley Fool contributor James Mickleboro owns shares in Endeavour Group Ltd.
Telstra Group Ltd
What it does: Telstra is a dividend stock that needs little introduction. This formerly government-owned telco is the leading provider of mobile, telephony, and internet services in Australia.
By Sebastian Bowen: Telstra has long been known as a dividend stalwart on the ASX. But this telco's sharp share price drop over August makes it a great place to start looking for passive income in September, in my view. Tesltra's drop from well over $4.30 a share to under $4 last month has pushed up its dividend yield considerably.
Today, this stock offers a fully franked dividend yield of more than 4.2%. I think Telstra has one of the safest dividends on the ASX 200 thanks to its defensive qualities. So a chance to grab Telstra shares at these levels is a compelling opportunity.
Motley Fool contributor Sebastian Bowen owns shares in Telstra Group Ltd.
ANZ Group Holdings Ltd
What it does: ANZ is one of the big four Australian banks. ANZ operates in 33 markets, providing banking and financial products and services to more than 8.5 million retail, small business, corporate. and institutional customers.
By Bronwyn Allen: An ASX survey reveals sustainable passive income is currently the biggest priority for investors in 2023. If that's what you want, then it's a no-brainer to include one of the big four ASX 200 bank shares in your portfolio.
Top broker Goldman Sachs has a buy rating on ANZ shares and predicts an annual dividend of $1.62 per share in FY24.
Based on the current ANZ share price of $25.13, this will mean a dividend yield of 6.1%.
This will also make ANZ shares the second-best yielder among the big four ASX 200 banks this financial year. And don't forget the amazing tax benefits of ANZ's full franking credits.
Motley Fool contributor Bronwyn Allen owns shares in ANZ Group Holdings Ltd.
