Are you currently looking for a source of passive income? If you are, the share market could be a great place to do it.
That's because there are countless ASX stocks out there that reward their shareholders with dividends each year.
But which one could be a buy right now?
One ASX stock which is forecast to provide investors with a generous dividend yield is listed below. Let's see why it could be a no-brainer buy for investors looking for passive income.
Broker says this ASX stock is a buy
According to a note out of Bell Potter, its analysts have toll road operator Transurban Group (ASX: TCL) on its Australian equities panel this month.
The broker highlights that its panel of favoured Australian equities offer attractive risk-adjusted returns over the long term. It considers the current macro-economic backdrop and investment environment, focusing on quality companies with proven track records, capable management and competitive advantages
Bell Potter has a buy rating and $14.20 price target on the ASX stock. This implies potential upside of 7.5% from current levels.
Commenting on its bullish view, the broker said:
Transurban is Australia's largest builder, owner and operator of urban toll road networks, with a diversified suite of Australian toll road assets (in Sydney, Melbourne, and Brisbane) along with toll roads outside Australia (in Northern Virginia, USA).
We believe the current inflationary environment is favourable for Transurban given its inflation-linked revenue stream with annual escalators. Moreover, TCL provides low risk cash flows over the long term, with long concession duration (30+ years), and relative traffic/income resilience. The group's current pipeline of growth projects is $3.3 billion (TCL's share of total project cost) and further huge development opportunities are expected over the next few decades, supported by population and economic growth.
What about passive income?
The broker believes that some generous dividend yields are on the way in the near term thanks to its low risk cash flows.
The broker estimates that Transurban is positioned to pay 65 cents per share in FY 2025 and then 72 cents per share in FY 2026.
Based on the ASX stock's current share price of $13.21, this equates to dividend yields of ~4.9% and 5.45%, respectively.
This means that if you were to invest $10,000 into Transurban's shares, you would be generating passive income of approximately $490 and then $545 over the next two years if Bell Potter's estimates prove accurate.
