The giant S&P/ASX 200 Index (ASX: XJO) share APA Group (ASX: APA) is a leading contender for passive income, in my eyes.
At the time of writing, it has a market capitalisation of $11.5 billion, according to the ASX. It's a leading owner of energy assets, related to gas transportation (via pipelines), other gas-related infrastructure, renewable energy generation, and electricity transmission.
There is only one business on the ASX that has increased its payout in consecutive years over a longer time period than this ASX 200 share, so APA has been very consistent.
For me, it's one of the leading ASX 200 shares on the passive income side, and it could help investors unlock $300 of monthly income.
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How to make good monthly dividends from this ASX 200 share
APA doesn't actually pay a distribution every single month, so I'd suggest looking at it as an annual goal and then dividing that by 12.
To receive an equivalent of $300 per month, we're talking about an annual goal of $3,600. How many APA shares would be needed for that?
The business is expecting to grow its payout by 1 cent per security in FY26, which will take the annual payout to 58 cents per security. At the time of writing, that translates into a distribution yield of 6.6%.
To receive $3,600 of passive income from the expected FY26 payout, an investor would need to own 6,207 APA shares.
Considering the business has grown its annual distribution every year for the past two decades, I believe management will want to continue growing the payout each year for the foreseeable future.
Why I'm confident the business can continue growing the passive income
Energy is a very important need for the Australian economy and way of life, with gas playing an important role in providing base power. APA transports half of the nation's gas usage, so it has an integral part to play in the energy system.
The business points out that a large majority of its fixed revenue is indexed to inflation, so it's seeing pleasing ongoing annual revenue growth.
Additionally, APA currently has a development pipeline for the period from FY26 to FY28, with an estimated value of approximately $2.1 billion, which can help grow the ASX 200 share's cash flow and distribution in the coming years as those projects come online.
Finally, the business could make acquisitions in the future, which could boost its asset base, cash flow, and passive income further.
