Looking to earn a steady investment income without constantly watching the share market? That's where ASX passive income shares come in.
Whether you're planning for retirement, wanting to supplement your earnings, or simply seeking to grow your wealth over time, investing in ASX dividend shares can be a compelling investment strategy.
In addition, companies that consistently pay and grow dividends often boast strong cash flow and a solid balance sheet.
With global share markets a little shaky right now, finding steady investment income can be a challenge. So we asked our Foolish writers which ASX dividend shares they think are worth snapping up in August.
Here's what the team came up with.
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6 best ASX dividend shares for August 2024 (smallest to largest)
- HomeCo Daily Needs REIT (ASX: HDN), $2.60 billion
- Lovisa Holdings Ltd (ASX: LOV), $3.60 billion
- GQG Partners Inc (ASX: GQG), $7.74 billion
- Origin Energy Ltd (ASX: ORG), $18.07 billion
- National Australia Bank Ltd (ASX: NAB), $110.01 billion
- BHP Group Ltd (ASX: BHP), $207.22 billion
(Market capitalisations as of market close 9 August 2024).
Why our Foolish writers love these ASX passive income stocks
HomeCo Daily Needs REIT
What it does: HomeCo Daily Needs REIT is a real estate investment trust (REIT) focused on essential services and large-format retail outlets.
By Kate Lee: HomeCo Daily Needs invests in retail properties that host essential services like supermarkets, pharmacies, and health and wellness centres. These sectors have proven to be resilient, even during economic downturns, as they provide products and services that consumers rely on regardless of the broader economic environment.
This resilience translates into stable rental income for HomeCo Daily Needs, ensuring a steady flow of distributions to its unit holders.
Another factor that makes this company an attractive passive income stock is its strategic growth initiatives. The REIT has been actively expanding its portfolio, acquiring high-quality assets in growth corridors that are expected to benefit from population growth and urbanisation.
These acquisitions not only diversify the company's revenue streams but also enhance its capacity to increase distributions to unitholders over time.
The REIT has maintained a conservative approach to leverage, ensuring its debt levels remain manageable, which is an added bonus point for investors seeking stability.
Presently, HomeCo Daily Needs offers a distribution yield of 7%, based on management's FY24 guidance. The REIT is also trading at a price-to-book ratio of 0.85x, which appears attractive to me.
Motley Fool contributor Kate Lee does not own shares of HomeCo Daily Needs REIT.
Lovisa Holdings Ltd
What it does: Lovisa is a fashion jewellery retailer with a growing store network across the globe.
By James Mickleboro: Lovisa could be a great ASX passive income share for long-term investors.
While the company's shares don't provide the biggest dividend yields today, I see scope for this to change over the next decade.
For example, analysts at Morgans are forecasting dividends per share of 80 cents in FY 2024 and then 86 cents in FY 2025. This equates to dividend yields of approximately 2.5% and 2.6%, respectively.
But given its bold and highly successful global expansion plans, I think Lovisa could grow its earnings and dividend by a compound annual growth rate of 15% through to 2034.
At that point, Lovisa would be paying a dividend of approximately $3.24 per share, which is just shy of a 10% yield based on its current share price.
Morgans currently has an add rating and a $37.00 price target on its shares.
Motley Fool contributor James Mickleboro owns Lovisa Holdings Ltd shares.
GQG Partners Inc
What it does: GQG is a fund manager based in the United States. It offers several funds, with four main strategies for US shares plus international, global, and emerging market shares.
By Tristan Harrison: When it comes to ASX passive income shares, I look for two main factors: a good dividend yield and growth.
GQG has committed to a dividend payout ratio of 90% of distributable earnings. That's a generous payout in my book, and it usually means that GQG has a solid dividend yield.
According to the forecast on Commsec, the fund manager could pay an annual dividend per share of 20.9 cents for FY24. That translates into a potential dividend yield of 7.8% for the current year.
Growth in the company's funds under management (FUM) is key to the company's revenue and profit because it doesn't charge much in the way of performance fees – it's all from management fees. Fund managers can deliver good operating leverage because an increase in management fees doesn't necessarily require a further increase in staffing numbers or other costs.
Between December 2023 and July 2024, FUM has grown by around 30% to US$156.3 million, which included US$13.9 billion of net inflows.
The Commsec prediction suggests the dividend could grow to 25.9 cents per share by FY26, which would yield 9.7%.
Motley Fool contributor Tristan Harrison does not own shares of GQG Partners Inc.
Origin Energy Ltd
What it does: Origin Energy is a leading provider of electricity, natural gas and solar energy to homes and businesses across Australia. The company's key operating segments include exploration and production, generation, renewable energy, and energy sales.
By Bernd Struben: Origin Energy is in a unique position to deliver ongoing and increasing passive income to shareholders for the foreseeable future, in my view.
Backed by a strong balance sheet and first half (H1 FY 2024) underlying profits of $747 million – up from $44 million in H1 FY 2023 – the Origin share price is trading 23% higher so far in 2024. That's the kind of growth trend I like buying into.
On the income front, Origin's 27.5 cents per share fully franked interim dividend marked the company's highest dividend payout ever. That's another growth trend that catches my eye.
Atop the final dividend of 20 cents per share, Origin trades on a fully franked trailing dividend yield of 4.6%.
With an eye on the longer term, I also believe Origin is in a unique position to help provide the massive increase in electricity demand forecast to be driven by power-hungry, AI-ready data centres through to 2030 and beyond.
Motley Fool contributor Bernd Struben does not own shares in Origin Energy Ltd.
National Australia Bank Ltd
What it does: NAB is a dividend stock that needs little introduction. It is one of the famous Big Four banks and is currently the second-largest bank stock on the ASX by market capitalisation.
By Sebastian Bowen: If you're searching for a stable and reliable source of passive income this August, I think NAB shares are a great place to start.
The recent stock market volatility that we've all endured saw NAB shares take a large haircut. But this cloud has produced a silver lining in that the starting dividend yield on NAB shares has ticked up as a result.
Banks might not be the most exciting investments. But NAB has shown an ability to fund large, fully franked dividends for decades now.
These dividends have also come with remarkable consistency and dependability over the past decade and beyond, with the excusable exception of the COVID-ravaged years of 2020 and 2021.
If you're looking for a reliable source of fully franked passive income, I think NAB shares are worth considering right now, especially with NAB shares sporting a dividend yield of just under 5% at recent pricing.
Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Ltd.
BHP Group Ltd
What it does: BHP is the biggest mining company on the ASX 200. It produces iron ore, copper, metallurgical coal, and nickel and is developing a potash operation.
By Bronwyn Allen: The iron ore price has fallen dramatically this year due to economic troubles in China, which is the world's biggest iron ore consumer. The 62% spot price has fallen from about US$144 per tonne at the start of the year to US$104 per tonne today.
The Australian Government forecasts a further fall to a nominal average of US$96 per tonne this year, US$84 per tonne in 2025 and US$77 per tonne in 2026.
Despite this, market analysts think BHP will be able to keep its dividends reasonably stable. The consensus forecast published on CommSec for the BHP dividend is a fully franked $2.27 in 2024, $2.31 in 2025, and $2.07 in 2026.
Based on Friday's BHP share price of $40.86 at the market close, this equates to dividend yields of 5.5%, 5.6%, and 5%, respectively.
Motley Fool contributor Bronwyn Allen owns BHP Group Ltd shares.
