Invest $833 in this ASX share each month to create passive income of $840 in 2024!

There are several key factors to keep in mind when investing in ASX shares for passive income.

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You don't need to be a millionaire to start earning a meaningful annual passive income stream.

In fact, by investing just $833 a month in ASX shares, you could create a passive income of $845 a year, or more, in only 12 months' time.

Now, there are a wide number of quality S&P/ASX 200 Index (ASX: XJO) dividend stocks that could help you achieve this goal. But, keeping in mind the importance of diversification, you wouldn't want to invest all of your money into a single, high-yielding company.

Even quality companies with a good track record of annual dividend payouts can run into short-term troubles that could slash the passive income you were expecting to bank.

However, as you may have noticed in the title, I did mention one particular ASX share.

Here's why.

This ASX ETF is a passive income leader

The ASX share in question is the BetaShares Australian Dividend Harvester Fund (ASX: HVST).

The appealing thing for passive income hunters is that this exchange-traded fund (ETF) gives investors instant diversity through its portfolio of 40 to 60 high-yielding, blue-chip ASX shares.

As of the end of December, the ETF's top three holdings are Commonwealth Bank of Australia (ASX: CBA) BHP Group Ltd (ASX: BHP) and CSL Limited (ASX: CSL).

And HVST pays out dividends on a monthly basis, meaning your next passive income payout is never too far away.

Because the ETF's holdings are actively managed and rebalanced every three months to target higher-yielding ASX dividend stocks, the annual management fee is 0.72%.

If you're looking to capture the magic of compounding so you can watch your annual income soar over the years, HVST offers a partial or full dividend reinvestment plan.

As at 31 January, the ETF had a 12-month trailing yield of 5.94%, 79.5% franked. Those franking credits bring the grossed-up yield to 8.45%.

Based on this grossed-up dividend yield alone, investing $833 a month (or $10,000 over a year) should deliver $845 in annual passive income.

Of course, we're also hoping to see the ETF deliver some share price gains in 2024.

The HVST share price is down 2% since this time last year. But the ETF has gained 10% since 31 October.

If that upward trend continues, it could see this ASX ETF deliver significantly more than $845 in passive income from those 12 monthly $833 investments.

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 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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