Investors on the hunt for passive income have been turning their attention to ASX energy shares.
With energy costs soaring, energy stocks have seen their profits leap. And they've been distributing those outsized profits to shareholders by delivering record-high dividend payouts.
While we've seen many of those dividends come down in FY23 as energy prices retraced from near-all-time highs, the big ASX energy shares continue to offer juicy yields.
And with many of those dividends coming with franking credits, investors may be able to hold onto more of that passive income at tax time.
But can I really earn a $3,000 annual passive income by buying just $14,300 of this ASX energy share?
Tapping ASX energy shares for passive income
Before we move on, take note that the yields you generally see quoted, and the ones we discuss here, are trailing yields. Future yields may be higher or lower depending on a range of company-specific and macroeconomic factors.
With that said, one of the leading passive income shares on the ASX over the past two years has been Yancoal Australia Ltd (ASX: YAL).
The past 12 months' dividends paid by the ASX coal stock have come down from those paid over the prior year. But with the share price also lower, the stock is still a top dividend payer.
Yancoal paid a final fully franked dividend of 70 cents per share on 28 April.
Management declared an interim dividend of 37 cents per share on 16 August. The stock traded ex-dividend yesterday, 5 September. If you owned the ASX energy share at market close on Monday, you can expect that passive income to land in your bank account on 29 September.
That works out to a full-year payout of $1.07 per share, 100% franked.
At the current Yancoal share price of $5.10, that equates to a juicy trailing yield of 21%.
So, let's crunch some numbers.
If I'm looking to bank $3,000 in passive income annually from this ASX energy stock, I'd need to buy 2,804 shares.
At $5.10 per share, that means an investment of $14,300 in Yancoal stock.
