Banking $2,000 a month in passive income from S&P/ASX 200 Index (ASX: XJO) dividend shares is far more achievable than you may think.
The ASX 200 offers numerous quality blue-chip companies with lengthy track records of reliable dividend payouts.
And unlike most international stock markets, like in the United States, many of these companies pay fully franked dividends. That will provide you with credit for the corporate taxes these companies have already paid on their profits.
Meaning, investors should be able to hold onto more of that passive income at tax time.
Before looking at my three top ASX 200 dividend shares to consider buying now, a few important points.
Diversification and trailing yields
First, please 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. While you can study forecast yields as well, those are essentially just analysts' best guesses at what the future may bring.
Second, while I'll look at three top ASX 200 shares to buy for passive income, an ideal income portfolio should hold considerably more than three stocks. Proper diversification among various sectors will reduce the risk of your income taking an unexpectedly big hit if any particular company or sector comes under pressure.
With that said…
A $2,000 monthly passive income from ASX 200 dividend shares
My first stock to buy for $2,000 a month in passive income is BHP Group Ltd (ASX: BHP).
The ASX 200 iron ore miner paid a final fully franked dividend of $1.251 per share on 28 September. The interim dividend of $1.096 per share was paid right before Easter, on 28 March.
That equates to a full-year (rounded) payout of $2.35 per share. At the recent BHP share price of $45.05 a share, BHP trades on a fully franked trailing yield of around 5.2%.
My second stock to buy now for passive income is ASX 200 coal share New Hope Corp Ltd (ASX: NHC).
New Hope paid a final fully franked dividend of 30 cents per share on 7 November. The interim dividend of 17 cents per share will be paid on 1 May. (New Hope stock trades ex-dividend on 15 April.)
At the recent New Hope share price of $4.74, the ASX 200 dividend stock trades on a fully franked yield (partly trailing, partly pending) of 9.9%.
This brings me to my third top passive income share, ASX 200 bank stock National Australia Bank Ltd (ASX: NAB).
NAB shares delivered a fully franked interim dividend of 83 cents per share on 5 July. The bank paid a final dividend of 84 cents per share on 15 December, for a full-year payout of $1.67 a share.
At the recent NAB share price of $34.63, that equates to a fully franked trailing yield of 4.8%.
How much to buy?
If I were to invest an equal amount in each of these ASX 200 dividend shares, I'd earn an average yield of 6.6%.
For my $2,000 monthly passive income (or $24,000) a year, I'd need to invest $363,636 today.
That should enable me to withdraw that monthly passive income without touching the capital.
I'll also be hoping for share price gains to help turbo-charge these returns.
And if I don't have that much money to invest in one go, that's fine too. I can always invest smaller amounts every month and let the magic of compounding help propel me to my goal in good time.
Now, as always, before investing in these ASX 200 dividend shares for passive income, or any other stocks, be sure to do your own thorough research first.
If you don't have the time, or are uncomfortable with that, reach out to an appropriate professional for some expert advice.
