Building a second income from ASX shares could be one of the best moves Australians can make during this period.
There are two big reasons this month could be a great time to start investing in passive income names.
Firstly, share prices have dropped amid the large spike in the oil price. Why is that helpful for building a second income? When the share price of a dividend-paying business falls, the dividend yield is boosted. For example, a 5% dividend yield becomes a 5.5% dividend yield if the share price drops 10%. Getting a bigger income return is useful.
Secondly, it appears inflation is returning, so it could be a good idea to invest in passive-income assets that can deliver a growing second income to offset inflation.
Image source: The Motley Fool
Future Generation Australia Ltd (ASX: FGX)
Future Generation is a listed investment company (LIC). A LIC structure can be advantageous over an exchange-traded fund (ETF) because the board of directors can decide on the level of dividend payments (and deliver consistency), whereas ETFs largely pass through the income they receive from their portfolios, so ETF payouts can be volatile.
Impressively, Future Generation Australia has increased its annual payout every year for the last 10 years in a row, an excellent record of consistency.
Another positive is that the LIC doesn't charge any management fees or performance fees. Instead, it donates 1% of its net assets to youth-focused charities.
Future Generation is invested in a portfolio of funds from fund managers who work for free. This means Future Generation Australia has a lot of underlying diversification. Over the last seven years to February 2026, its portfolio has returned an average of 10.7%.
In terms of the dividend yield, its 2025 payout translates into a grossed-up dividend yield of 7.7%, including franking credits. That's a great starting yield for investors wanting a second income, in my view.
APA Group (ASX: APA)
APA is one of the largest energy infrastructure businesses in Australia. Its main portion of its asset base is a national gas pipeline network – it transports half of the country's gas usage.
Most of the business' revenue is linked to inflation, so any increase in inflation can accelerate its revenue growth, though higher interest costs will be an offset to that.
The ASX share also has other assets, like gas storage, gas processing, gas-powered electricity generation, wind farms, solar farms, and electricity transmission. It's building a diversified portfolio.
APA has increased its annual distribution every year for the past two decades in a row. It has been one of the most reliable dividend growth payers on the ASX.
It has partly achieved this through the steady expansion of its asset base, investing in new assets (such as pipelines) and acquisitions (such as Basslink).
I'm expecting the business to continue growing its distribution over the rest of this decade, which makes it an attractive second income. In FY26, it's expected to grow its distribution to 58 cents per security, which would be a distribution yield of 6.3%.
I like APA's defensive earnings – energy remains a very important aspect of the Australian economy, particularly if it continues expanding its pipeline network and capacity.
