How I'd build a solid ASX passive income portfolio with just $9,000

I'd back these stocks for dividends.

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The stock market is a wonderful place to find a variety of ASX dividend shares. If I were looking to build a solid ASX passive income portfolio, I'd go for a few key positions.

While a lot of investors are attracted to ASX bank shares and ASX mining shares, I'd suggest there are a number of other sectors that can provide a very appealing source of investment income.

If I had $9,000 to try to build a portfolio of reliable dividend payers, I'd invest $3,000 in the first pick because of the current lower valuation, and invest $2,000 in each of the others. This could be a good start for a diversified portfolio focused on income.

APA Group (ASX: APA)

APA is an infrastructure business that owns a huge network of gas pipelines around Australia, transporting half of the country's usage. It also has other gas-related assets including storage, processing and gas-powered energy generation. The business also owns renewable energy assets and is looking to make a large renewable energy acquisition.

The business generates pleasing cash flow each year, and each time it adds to its portfolio of assets it can increase the cash flow generation. That growing cash flow has led to the business being able to increase its distribution every year since 2004.

The 18% fall of the APA share price in 2023 to date has pushed the guided FY24 distribution yield to 6.5%. That's a great yield to start this solid ASX passive income portfolio.

Sonic Healthcare Ltd (ASX: SHL)

This business provides pathology services in a number of countries including Australia, Germany, the UK and the US. People don't choose when to get sick, even if there's an economic downturn, providing consistent demand for Sonic's services. There is a lot of government funding in various countries that helps pay for pathology.

It generated a lot of extra profit during the COVID-19 period, as it was involved with analysing millions of tests. Sonic has wisely used some of this profit to make a number of acquisitions, particularly in Europe.

The company has a 'progressive dividend policy', meaning the board wants to increase the dividend per share each year. Over the past three decades, it has increased its annual dividend most years.

Estimates on Commsec suggest that the business could pay an annual dividend per share of $1.07, which would be a grossed-up dividend yield of 4.9%.

Metcash Ltd (ASX: MTS)

Metcash has a food pillar that supplies IGAs around Australia and a liquor pillar that supplies independent retailers like IGA Liquor, Bottle-O, Cellarbrations and Porters Liquor. It also has a hardware division which includes Mitre 10, Home Timber & Hardware and Total Tools.

The business has committed to a dividend payout ratio of 70% of underlying net profit after tax (NPAT). When combined with the relatively low price/earnings (P/E) ratio, it results in a pleasing dividend yield.

Despite economic difficulties, total sales in the 18 weeks to 3 September 2023 showed a rise of 1.7% in the AGM trading update.

According to Commsec, the Metcash grossed-up dividend yield could be 8.1% in FY24. This is a very strong addition to yield in a solid ASX passive income portfolio.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

Soul Pattinson is an investment house that has built a diversified portfolio across a number of sectors including telecommunications, resources, agriculture, swimming schools, property, building products and so on.

The business has grown its dividend every year on the ASX, which is the longest growth streak in Australia, which is why I've picked it in my ASX passive income portfolio.

It uses the dividends it receives from its investments to then pay dividends to shareholders.

Soul Pattinson's last two ordinary dividends have amounted to 79 cents per share, which is a grossed-up dividend yield of 3.3%.

Foolish takeaway

By putting $9,000 into these four businesses, the grossed-up dividend income from this ASX passive income portfolio would be approximately $520 in year one, and it would hopefully grow each year thereafter if these businesses keep increasing their payments.

Motley Fool contributor Tristan Harrison has positions in Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Metcash and Sonic Healthcare. 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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