How I'd aim to build a bulletproof monthly ASX passive income portfolio with just $10,000

If I were building a bulletproof passive income stream today, I wouldn't invest in just a few high-yielding ASX stocks.

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The ASX offers some great opportunities for investors to build a reliable passive income stream.

Many leading ASX companies also offer franked dividends, giving investors potential tax benefits on the extra income they earn.

Now, I've analysed and written about a large number of high-yielding ASX dividend shares over the years. And many of those stocks continue to pay market-beating yields today.

But if I were aiming to build a more bulletproof passive income stream with a $10,000 investment today, I wouldn't invest in just a few high-yielding stocks.

Sure, that might see me earning a yield north of 10% next year.

But it might not.

To garner a reasonably reliable second income, I'd need to invest in at least 10 different ASX dividend shares operating across a range of sectors and ideally some different countries. For really rock-solid diversity that portfolio might even number 20 shares.

But there's an easier way for me to secure a reliable passive income with my $10,000 investment.

And that's to invest in leading, high-yielding ASX exchange-traded funds (ETFs).

Two ASX ETFs to deliver my passive income

As with ASX dividends stocks, there are a number of quality ASX ETFs that pay bank-busting dividend yields.

Here are two that I'd buy for passive income today.

First up is the BetaShares Australian Dividend Harvester Fund (ASX: HVST).

According to the company's website, "HVST aims to provide franked income that exceeds the net income yield of the broad Australian sharemarket on an annual basis."

The ETF provides investors with exposure to a diversified portfolio of Australian shares which, atop the passive income, also have the potential for capital gains.

On average, HVST holds 40 to 60 ASX shares. Currently, its top three holdings are BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB) and CSL Limited (ASX: CSL).

Roughly every quarter the fund's managers rebalance the portfolio to give shareholders reweighted exposure to ASX stocks expected to pay a dividend during the ensuing quarter.

Pleasingly, the ASX ETF makes its passive income payments (currently franked at 77%) on a monthly basis.

As at 31 October, the 12-month yield comes out to 7.4%. The 12-month grossed-up yield, which includes franking credits, equates to 9.9%.

Management costs are on the higher end, at 0.72%.

Which brings us to the second ASX ETF I'd invest my $10,000 in for a bulletproof passive income, the Global X S&P 500 High Yield Low Volatility ETF (ASX: ZYUS).

ZYUS gives ASX investors exposure to 50 of the highest dividend-yielding stocks listed on the US S&P 500 Index (SP: .INX).

Which offers that multi-nation diversification I mentioned up top to help reduce the risk to my income stream.

The ETF pays quarterly distributions. And its top three holdings are Verizon Communications Inc (NYSE: VZ), AT&T Inc (NYSE: T) and Altria Group Inc (NYSE: MO). Management also aims to provide low-volatility returns.

Over the past 12 months, ZYUS delivered a yield of 8.1%, unfranked.

Management costs are 0.35%.

On to the maths

If I were to split my $10,000 investment evenly between these two ASX ETFs I'd earn a trailing yield of 7.8% (ignoring the potential benefits of the franking credits from HVST).

That would earn me an annual passive income of $780.

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 positions in and has recommended CSL. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Verizon Communications. The Motley Fool Australia has recommended CSL. 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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