The ASX stock Scentre Group (ASX: SCG) is a top contender for passive income, in my books.
It's the Australian and New Zealand owner of the Westfield shopping centres, so it owns significant real estate assets across cities.
There is a seemingly limited supply of major new shopping centres in Australia's large cities, so Scentre controls a strong market position in those areas. Online shopping is a challenge, but physical retail remains the dominant force. Plus, click and collect shopping needs a physical location to succeed.
The last few years have been challenging for businesses in discretionary retail or real estate – Scentre Group is exposed to both. Higher interest rates and inflation were a challenge because it was hurting retail spending, raising debt costs, and creating a headwind for property values. But that's now turning around. The ASX stock's passive income prospects look appealing.
Potential passive income from the ASX stock
In the FY25 first-half result, the business reported funds from operations (FFO – net rental profit) grew 3.2%, and there was a 2.5% hike in the half-year distribution.
Thanks to strong performance, the business upgraded its distribution guidance for the second half of 2025 to 8.905 cents per security, representing 3.5% year-over-year growth. This would equate to full-year distribution growth of 3%.
The forecast on Commsec suggests the annual distribution per security could rise again to 18.2 cents in FY26. I'm going to utilise the 2026 forecast for my calculations because that's the next full-year distribution the business will pay for.
At the time of writing, that translates into a forward distribution yield of 4.5%.
Let's look at how many Scentre Group shares someone would need to buy to gain $350 per month of passive income.
Desired payments
The ASX stock doesn't pay a distribution every month, so it's better to think of the target as an annual payout.
Receiving $350 per month translates into an annual goal of $4,200.
To receive that level of passive income, we'd need to own 23,077 Scentre shares.
Is this a good time to buy?
I believe that Scentre Group is poised to benefit significantly from the RBA interest rate cuts, which could help customer visitor numbers, rental income, potentially reduce debt costs, and boost property values.
Plus, the business is looking at how it can unlock significant value from its land holdings. At the time of the HY25 result, Scentre CEO Elliott Rusanow said:
Our land holdings could potentially supply a significant number of new dwellings in town centres where people already want to live and work. We are engaging with governments and potential capital partners on how we can realise these housing opportunities across our portfolio.
Our strategy to attract more people to our Westfield destinations and to unlock long-term growth opportunities from our strategic land holdings is expected to continue to deliver ongoing growth in earnings and distributions.
The ASX stock offers both pleasing passive income and growth potential.
