If it's an extra $10,000 a year in passive income you're after, then Westpac Banking Corp (ASX: WBC) shares are worth a closer look.
Atop potential further share price gains, Westpac has historically paid out two fully franked dividends a year.
As for the share price, in early afternoon trade today, shares in the S&P/ASX 200 Index (ASX: XJO) bank stock are up a slender 0.1%, changing hands for $41.01 apiece.
For some context, the ASX 200 is down 0.4% at this same time.
Taking a step back, Westpac shares have strongly outperformed over the past year, now up 37.2% and handily outpacing the 9.3% 12-month gains delivered by the benchmark index.
We'll take a look at just how many Westpac shares you'd need to buy for a $10,000 annual passive income below.
But first…
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Important reminders on your passive income goals
Before digging into the passive income potential from Westpac, remember that a properly diversified ASX dividend portfolio will contain a lot more than just a single stock.
There's no magic number. But somewhere in the range of 10 to 20 dividend stocks is a decent ballpark figure. Ideally these will operate in various segments and geographic locations. That will reduce the risk of your income stream taking a big hit if any one company or sector runs into a rough patch.
Also, remember that the 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.
In Westpac's case those include the performance of the Aussie economy, with banks generally more profitable during times of economic growth. And interest rates also play a factor. Banks are often able to improve their net interest margin (NIM) amid higher interest rate environments.
Now, returning to our headline question…
Banking on Westpac shares for $10,000 a year in passive income
Over the past 12 months, Westpac paid two fully franked dividend.
The ASX 200 bank paid an interim dividend of 76 cents per share on 27 June. And Westpac paid out its final dividend of 77 cents per share on 19 December.
That equates to a full year passive income payout of $1.53 a share.
So, to secure your $10,000 yearly passive income stream (based on the trailing yield), you'd need to buy 6,536 Westpac shares today, with potential tax benefits from those franked credits.
How much would that cost?
At the current Westpac share price of $41.01, you'd need to invest $268,041 now to aim for that $10,000 yearly passive income.
You could also invest smaller amounts on a monthly basis to reach that income goal over time.
Westpac shares trade on a fully franked trailing dividend yield of 3.7%.
