Looking to triple the payout you receive from S&P/ASX 200 Index (ASX: XJO) dividend shares?
You're not alone!
Now, what I'll show you below is really quite simple. There's no magic involved here, other than the breathtaking powers of compounding.
What is involved is choosing your three ASX 200 dividend shares wisely. And being patient. Then, in less time than you might think, you could be earning triple the annual passive income from these stocks.
Three high-yielding ASX 200 dividend shares
There are lots of quality income stocks to choose from on the ASX.
I prefer larger companies paying fully franked dividends, so I can hold onto more of that passive income at tax time.
I also prefer companies with long track records of making reliable, twice-yearly dividend payouts.
And while future payouts will vary from trailing yields we're looking at (likely higher in some years and lower in others), I aim for ASX 200 dividend shares that I think will roughly maintain current yields once averaged out over the longer term.
With that said, coal stock Whitehaven Coal Ltd (ASX: WHC) has paid (or declared) a total of 74 cents per share in dividends over the past 12 months. At the current share price of $6.08, that equates to a fully franked yield of 12.2%.
The ASX 200 dividend share is flush with cash, reporting a record FY 2023 net profit of $2.67 billion, up 36.7% from FY 2022.
Up next, we have Harvey Norman Holdings Ltd (ASX: HVN).
The ASX 200 retail share has paid (or declared) 25 cents per share in dividends over the past 12 months. At the current Harvey Norman share price of $4.02, that equates to a fully franked yield of 6.2%.
That comes despite the company coming under pressure amid cutbacks in consumer discretionary spending. This saw Harvey Norman report a 3.8% year-on-year decline in revenue to $9.19 billion for FY 2023. And net profit after tax (NPAT) was down 33.5% from FY 2022 to $540 million.
Finally, the third ASX 200 dividend share we're targeting today is Woodside Energy Group Ltd (ASX: WDS)
The oil and gas stock has paid (or declared) $3.40 in dividends over the past 12 months. That equates to a fully franked trailing yield of 8.9%.
Woodside reported some strong half-year results in August, including a record H1 NPAT of US$1.74 billion, up 6% from FY 2022.
Tripling that passive income
Now, let's get back to tripling the payouts from these three ASX 200 dividend shares.
The average yield paid by the three stocks is 9.1%, an average we'll assume will hold out over the long term.
If you invest $5,000 in each company, you'll earn $1,365 in passive income that first year. (Given our assumptions, the tripling will work with any amount you choose to invest.)
Now, here's where the magic of compounding comes in.
Without ever adding to your initial investment, if you reinvest those dividends each year, in 13 years your investment in these ASX 200 dividend shares will have grown to $46,539.
At a 9.1% yield, that works out to an annual passive income of $4,235. Or more than triple what you earned the first year.