With many Aussies feeling the pinch from sticky inflation and ongoing higher interest rates, ASX passive income shares offer a great means to stretch that money further.
We'll look at three top dividend stocks below that can help ease the burden of rising costs and perhaps even open the door for some of those extra luxury purchases.
You'll notice that all three ASX passive income shares operate in distinctly different sectors. That kind of diversity will help lower the risk of my income taking an overly large hit if any one sector hits a rough patch. I'm also sticking to the larger end of the market with ASX 200 listed companies.
Now, a properly diversified income portfolio will contain more than just three stocks. There's no precise number, but 10 is a decent ballpark. However, for the purposes of this article, we'll stick to just three.
Before we dive in, remember that the dividend 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.
With that said…
Three ASX passive income shares to tackle inflation
The first ASX passive income share I'd buy to stretch my money further is ANZ Group Holdings Ltd (ASX: ANZ).
The ASX 200 bank stock has a lengthy track record of paying out two dividends a year. With the exception of the past two dividends, which were franked at 56% and 65%, respectively, ANZ's dividends tend to be fully franked.
Eligible investors will have received the final dividend of 94 cents a share on 22 December. ANZ paid an interim dividend of 83 cents a share on 1 July. That equates to a full-year payout of $1.77 a share.
Although the ANZ share price is down 0.8% in intraday trade today at $31.01, it is up 21% in 12 months. At the current share price, ANZ shares trade on a partly franked trailing dividend yield of 5.7%.
Which brings us to the second ASX passive income share that can help me combat inflation, Fortescue Ltd (ASX: FMG).
Unlike ANZ, Fortescue shares have come under pressure over the past 12 months amid slumping iron ore prices, though the dividends have held up well. Down 0.5% today at $19.12, the Fortescue share price is down 17% in a year, with shares remaining up 100% over five years.
On the dividend front, the ASX 200 mining stock paid its interim dividend of $1.08 a share on 27 March and delivered the final dividend of 89 cents a share on 27 September, both fully franked. With a full year payout of $1.97 a share, this sees Fortescue shares trading on a fully franked trailing yield of 10.3%.
Rounding off the list of three ASX passive income shares I'd buy to stretch my money further is Harvey Norman Holdings Ltd (ASX: HVN).
At $4.53, shares in the diversified ASX 200 retailer are down 0.6% today and up 20% since this time last year.
Eligible shareholders will have received Harvey Norman's interim dividend of 10 cents a share on 1 May. They can expect to bank the final dividend of 12 cents a share on 13 November, both fully franked. It's a bit too late to grab that one if you don't already own the stock, with Harvey Norman trading ex-dividend on 15 October.
With a full-year payout of 22 cents a share, Harvey Norman trades on a fully franked trailing dividend yield of 4.9%.
If I were to invest an equal amount in each ASX passive income share, I could expect to earn an annual dividend yield of 7.0%.
And, of course, I'll be hoping to see some annual share price gains as well.
