How I'd invest $50,000 in ASX dividend shares for retirement, if I had to start from scratch

Here's how I'd start building retirement income from square one.

| More on:
Loving senior couple at the swimming pool. Senior woman sitting on the edge of the pool and giving lemonade to her husband who is swimming.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

I'd imagine most people would love to be able to live off retirement income from ASX dividend shares because of how easy it is to watch the dividends flow into our bank accounts.

Anyone can start building their portfolio with retirement in mind from square one. But, someone could really accelerate their passive income earnings if they have $50,000 to invest.

When thinking about retirement income, I'd want to own businesses I'm confident are likely to grow their payouts in the coming years.

I'm going to talk about how I'd split $50,000 across multiple ASX dividend shares and how much dividend income that could produce.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)

I'd put the first $15,000 into Soul Patts shares. The investment house has been operating for more than 120 years and has paid a dividend in every one of those years. Additionally, it has grown its annual dividend every year since 2000, which is the longest growth record on the ASX.

The ASX dividend share is invested in a wide variety of sectors including telecommunications, resources, financial services, agriculture, swimming schools, building products, industrial properties, and plenty of other sectors.

Soul Patts currently has a trailing grossed-up dividend yield of 3.5%, including franking credits.

MFF Capital Investments Ltd (ASX: MFF)

I'd put the next $15,000 into MFF shares. This investment business focuses on owning high-quality international shares with impressive economic moats and strong growth outlooks. We're talking about names like AlphabetVisaAmazon, and Mastercard.

In my opinion, MFF's investment style gives it a higher chance of relatively good returns over the long term. The ASX dividend share can use some of those investment profits to pay its annual ordinary dividend, which has increased every year since 2018.

It's expecting to pay a dividend for FY25 that translates into a grossed-up dividend yield of 5.1%, including franking credits. It's also trading at a discount of around 10% to its pre-tax net tangible assets (NTA).

I like the high levels of diversification offered by these first two businesses, which is why I'm willing to put $15,000 into each of them.

Centuria Industrial REIT (ASX: CIP)

With the next $10,000, I'd put that into this real estate investment trust (REIT) focused on industrial properties. These properties are exposed to several positive growth drivers, such as the increasing adoption of e-commerce, data centre demand, and the increased need for refrigerated space (for food and medicine).

There is limited space in our capital cities for new, large warehouses, which helps push up the rent and occupancy rate. I think this will help the ASX dividend share grow its rental profits and distributions in the coming years. RBA cash rate cuts could also help decrease the cost of debt and increase the valuation of the properties.

Its FY25 distribution equates to a distribution yield of 5.2%.

APA Group (ASX: APA)

With the final $10,000, I'd want to put it into APA shares. This business owns a significant portfolio of energy assets, including gas pipelines, other gas infrastructure, renewable energy generation, and electricity transmission.

APA has grown its distribution every year for 20 years in a row, which is the second-best record on the ASX. The ASX dividend share has provided guidance that its FY25 distribution per unit would increase by 1.8% to 57 cents per security, translating into a distribution yield of 6.9%.

Its top line is growing thanks to the vast majority of its revenue being linked to inflation. It is also regularly adding to its portfolio thanks to acquisitions and investing in creating new pipelines or other assets.

How much dividend income these ASX dividend shares would produce

If I invested $50,000 across these businesses as I outlined, it would create approximately $2,500 of annual dividend income, which is a solid level to start with and can grow from here.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Tristan Harrison has positions in Centuria Industrial REIT, Mff Capital Investments, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Alphabet, Amazon, Mastercard, Visa, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Apa Group and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has recommended Alphabet, Amazon, Mastercard, Mff Capital Investments, and Visa. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A mature aged man with grey hair and glasses holds a fan of Australian hundred dollar bills up against his mouth and looks skywards with his eyes as though he is thinking what he might do with the cash.
Dividend Investing

1 ASX dividend stock down 21% I'd buy right now

This business is trading at a very appealing value for a long-term buy.

Read more »

Two smiling women doing a jigsaw puzzle.
Dividend Investing

I'd buy 7,143 shares of this ASX 200 stock to aim for $100 a month of passive income

This business is delivering growing and resilient passive income.

Read more »

Australian dollar notes in businessman pocket suit, symbolising ex dividend day.
Dividend Investing

Interest rates are falling. Here's why you should be buying ASX dividend stocks

Dividend shares can run rings around cash investments.

Read more »

A man closesly watch a clock, indicating a delay or timing issue on an ASX share price movement
Dividend Investing

9 ASX shares going ex-dividend next week

Time is running out if you want to buy these ASX stocks with their next dividends attached.

Read more »

A wad of $100 bills of Australian currency lies stashed in a bird's nest.
Dividend Investing

$10,000 in savings? Here's a smart passive income plan for investors to consider

You only need one ASX share to start receiving passive income.

Read more »

Person handing out $100 notes, symbolising ex-dividend date.
Dividend Investing

Brokers say these ASX dividend shares are buys for 5% to 7% yields

Income investors might want to check out these buy-rated shares.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Dividend Investing

Looking for big income? 2 ASX dividend stocks to buy today

Good yields are hard to find these days.

Read more »

A happy couple relax in a hammock together as they think about enjoying life with a passive income stream.
Dividend Investing

A 4.5% ASX dividend stock paying cash every single month

This ETF plans on paying 12 dividends a year.

Read more »