Creating a lasting passive income with the right S&P/ASX 200 Index (ASX: XJO) stocks could make all the difference between a comfortable retirement and a luxurious one.
If you're after a more luxurious retirement, the sooner you start building a portfolio of quality dividend stocks, the larger that extra income stream is likely to be.
Below, we look at three top ASX 200 stocks that could create lasting passive income.
Just keep in mind that a proper income portfolio should contain more like 10 (or so) dividend stocks, ideally operating in different market sectors and across different geographic locations. That kind of diversity will help to lower the overall risk to your investment portfolio.
Also, remember 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 the dividends paid out by the three ASX 200 companies we examine below will almost certainly vary from year to year, I believe all three will continue to reward passive income investors over the long term handsomely.
With that said…
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Tapping ASX 200 stocks for lasting passive income
The first company I'd buy to create lasting passive income is ASX 200 bank stock Commonwealth Bank of Australia (ASX: CBA).
CBA has a long track record of paying two fully franked dividends per year. Australia's biggest bank even came through with two dividends in the pandemic addled year of 2020.
As for the past 12 months, CBA paid a final dividend of $2.40 a share on 28 September. The interim dividend of $2.15 a share landed in eligible shareholders bank accounts on 28 March.
That equates to a full-year passive income payout of $4.55 a share, fully franked.
Following a 26% share price surge over the past year, CBA's dividend yield has come down. At yesterday's closing price, CBA shares trade on a fully franked trailing yield of 3.56%. But I still think this is a key stock for delivering ongoing income into retirement.
The second ASX 200 stock I'd buy for enduring passive income is Woodside Energy Group Ltd (ASX: WDS). Unlike CBA, the Woodside share price has fallen 24% over the last year.
But from a yield perspective, now could be an ideal time to buy the stock. Despite the world's decarbonisation push, global demand for oil and gas is greater than ever and expected to grow into next year.
On the passive income front, Woodside paid an interim dividend of $1.243 a share on 28 September and a final dividend of 91.7 cents a share on 4 March. That works out to a full-year payout of $2.16 a share.
At yesterday's closing price, Woodside shares trade on a fully franked trailing yield of 7.93%.
Rounding out the list of ASX 200 stocks to create lasting passive income is mining giant BHP Group Ltd (ASX: BHP), the biggest company on the ASX.
BHP shares have also slipped 8% over the past 12 months. And the company's dividends will fluctuate in rough line with its top-earning commodities over time. Importantly, though, all of these commodities should remain in strong demand for many years to come. And despite already being the largest stock on the ASX, BHP continues to pursue growth strategies.
As for that passive income, BHP paid a final dividend of $1.251 a share on 28 September. The miner paid an interim dividend of $1.096 a share on 28 March for a full-year, fully franked payout of $2.347 a share.
At yesterday's closing price, that sees BHP shares trading on a fully franked trailing yield of 5.49%.
