Why I'd target these 2 top ASX dividend shares today for a $500 monthly passive income

Whether you choose to reinvest that passive income or spend it as it hits your bank account, here are two leading ASX dividend shares to consider today.

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A $500 monthly passive income from ASX shares might not be life-changing.

But then an extra $6,000 a year landing in your bank account certainly isn't anything to sneeze at either.

Now, I might choose to reinvest those dividends to help my wealth grow over time. Or I might spend them as they come in. Most likely, I'd do a little of both.

Whatever plans you might have for that additional passive income, here are two top ASX dividend shares I'd target to get an extra $500 a month.

Trailing yields and diversification

Before diving in, a few points to keep in mind.

First, a diversified passive income portfolio should contain more than just two ASX shares. There is no precise number to offer that diversity, but 10 is a reasonable starting point.

Second, the yields you generally see quoted and those 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, while their payouts will fluctuate, I believe both these ASX dividend shares should continue to offer outsized yields over the long term. And I believe they offer an excellent starting point for building a broader passive income share portfolio over time.

Two leading ASX shares offering market-beating passive income

The first ASX dividend share I'd buy to build my $500 a month in passive income is department store operator Myer Holdings Ltd (ASX: MYR).

Myer paid a final dividend of 2.5 cents per share on 7 November. The All Ordinaries Index (ASX: XAO) retail stock delivered an interim dividend of 8 cents per share on 11 May.

That comes out to a full-year dividend payout of 10.5 cents per share, fully franked. At the current Myer share price of 64 cents, that equates to a trailing yield of 16.4%.

The Myer share price is up 6% over the past 12 months but down a precipitous 40% over the past six months. While shares might slide further in the short term, I believe this represents a good buying opportunity to lock in that long-term passive income.

Which brings us to our second high-yielding ASX dividend share, Yancoal Australia Ltd (ASX: YAL).

The All Ords coal stock has benefited from sky-high coal prices. While coal prices have come down from last year's all-time highs, crimping the interim dividend, Yancoal remains a top passive income stock.

And as with Myer, I believe the 29% fall in the Yancoal share price over the past six months offers a potentially lucrative longer-term entry point.

As for that income, Yancoal paid a final fully franked dividend of 70 cents per share on 28 April. The coal miner will pay its final dividend of 37 cents per share on 29 September.

That works out to a full-year dividend payout of $1.07 per share, 100% franked.

At the current Yancoal share price of $4.82, that equates to a market-smashing yield (part trailing, part pending) of 22.2%.

On to the maths

So, how much do I need to invest in these two top ASX dividend shares today to garner a potential $500 monthly passive income, or $6,000 a year?

If I invest the same amount in both stocks, I'd earn an average trailing yield of 19.3%.

That means I'd need to invest $31,088 today for that extra annual income of $6,000.

Now, that's a sizeable amount to invest in one go.

If I didn't have that much to spend today, I could always invest smaller sums, say $1,000 a month. Eventually, I'll reach my goal.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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