A $500 monthly passive income from ASX shares might not be life-changing.
But if you're like me, that extra $6,000 a year would sure come in handy.
Over time, once that income is coming in on a regular basis, I'd likely dip into it to fund some extra luxuries, like overseas vacations.
Now, here's how I'd aim to earn an average passive income of $500 per month with ASX shares.
A $500 monthly passive income from ASX shares
Below we take a look at four specific S&P/ASX 200 Index (ASX: XJO) shares I'd consider targeting now for their lengthy track record of paying fully franked dividends.
Just take note that the yields you generally see quoted are trailing yields. Future yields may be higher or lower, depending on a range of company-specific and macroeconomic factors.
Keeping that in mind, I'd eventually aim for an ASX share portfolio with around 10 quality dividend stocks to help smooth out the returns. I'd also invest across different sectors, reducing the risk that my passive income stream takes a big hit if any particular sector hits some turbulence.
Australia's biggest bank ticks all of my prerequisite boxes as a reliable, long-term dividend payer.
Over the past 12 months, CBA has delivered a total of $4.50 per share in fully franked dividends. At yesterday's closing price, CBA shares trade on a trailing yield of 4.4%.
BHP has paid out a total of $2.62 per share in fully franked dividends over the past full year. That equates to a trailing yield of 5.6%.
Harvey Norman stock has delivered a total of 25 cents per share in fully franked dividends over the 12 months. At yesterday's closing price, that works out to a trailing yield of 6.6%.
Over the past 12 months, the oil and gas stock has paid out a total of $3.40 per share in fully franked dividends. Woodside shares currently trade on a juicy trailing yield of 10.7%.
On to the maths
If I invest an equal amount into each ASX 200 dividend stock, I'd earn an average trailing yield of 6.8%.
That means for my $500 a month in passive income (or $6,000 a year), I'd need to invest $87,912 today.
Now, that's a sizeable sum.
But as I said up top, my aim here would be to build up my ASX dividend portfolio over time, rather than investing everything in one lump sum.
With the magic of compounding working for me, I'll achieve my goal in good time.