If you have $20,000 to invest in the share market and have a focus on passive income, then the two ASX dividend shares in this article could be great options for these funds.
That's because not only have they been named as buys, but they are tipped to continue increasing their dividends long into the future.
Let's see what a $20,000 investment in these shares could turn into according to analysts:
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APA Group (ASX: APA)
APA Group could be a great option for some of these funds. It is a leading Australian energy infrastructure company with a $26 billion portfolio of gas, electricity, solar and wind assets.
This includes 15,000 kilometres of natural gas pipelines that connect sources of supply and markets across mainland Australia. It also owns and operates the Mondarra Gas Storage and Processing Facility and the Emu Downs Wind Farm in Western Australia, Diamantina and Leichhardt Power Stations in Queensland, the Dandenong LNG Storage Facility in Victoria, and the Central Ranges Gas Distribution Network servicing Tamworth in New South Wales.
APA Group's earnings from these assets continue to grow at a predictable rate. As a result, it is on track to lift its dividend for 20 years in a row.
Analysts at Macquarie expect this run to continue. They are forecasting dividend increases to 57 cents per share in FY 2025 and then 57.5 cents per share in FY 2026. Based on the current APA Group share price of $7.18, this equates to 7.9% and 8.1% dividend yields, respectively.
This means that if you were to invest half the money ($10,000) into this ASX dividend share, you would receive $790 in passive income.
Macquarie also sees plenty of upside for investors. It has an outperform rating and $8.23 price target on its shares.
IPH Ltd (ASX: IPH)
Another ASX dividend share that could be a great source of passive income is IPH. It is an international intellectual property (IP) services company with a network of member firms working throughout ten IP jurisdictions.
It has clients in more than 25 countries. This includes a diverse client base of Fortune Global 500 companies and other multinationals, public sector research organisations, SMEs, and professional services firms.
IPH has been able to grow its dividend each year for the past decade. The good news is that Goldman Sachs believes this can continue for at least the next three years.
It is forecasting further increases to 36 cents per share in FY 2025 and then 39 cents per share in FY 2026. Based on the current IPH share price of $5.11, this represents fully franked dividend yields of 7% and 7.6%, respectively.
This means that a $10,000 investment would pull in passive income of $700.
As with APA Group, there could be big gains on offer here as well. Goldman has a buy rating and $7.50 price target on its shares.
Total passive income
In total, this means that a $20,000 investment split across the two ASX dividend shares would generate passive income of almost $1,500 over the next 12 months if these brokers are accurate with their estimates.
