Where I'd invest on the ASX for passive income right now

Building passive income isn't just about yield. These ASX shares highlight what really matters over time.

| More on:

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

If I'm looking for passive income from the share market, I would focus on businesses that can generate steady cash flow and return it to shareholders consistently over time.

That would likely lead me toward companies with strong positions in their industries and earnings that can support reliable dividends.

Here are four ASX shares I would look at right now.

Happy young woman saving money in a piggy bank.

Image source: Getty Images

BHP Group Ltd (ASX: BHP)

BHP is one of the first names that comes to mind for passive income.

It generates significant cash flow from its large-scale mining operations and that flows through to dividends when conditions are supportive.

I also like the direction the business is heading. Copper is becoming a bigger part of the story, which ties into long-term demand from electrification and infrastructure.

There is also future growth from potash, which could add another layer to earnings over time.

Overall, I think this makes the mining giant a great option for an income portfolio.

Telstra Group Ltd (ASX: TLS)

Telstra is another ASX share that could be a good candidate for a passive income portfolio.

The telco leader operates in an essential industry, with customers relying on its network every day. That creates recurring revenue, which helps support its dividend.

In addition, the business continues to invest in its network, which supports its position and earnings over time.

As a result, I see this as one of the steadier income options on the ASX.

Macquarie Group Ltd (ASX: MQG)

Macquarie adds something different to the mix.

Its earnings come from a range of activities, including asset management, infrastructure, and financial services. That diversification can support income over time, even as different parts of the business move through cycles.

I also like how the company allocates capital. It has a long history of identifying opportunities and building new earnings streams, which can support both growth and dividends.

Coles Group Ltd (ASX: COL)

Coles is a business I associate with consistency.

People continue to spend on groceries regardless of the broader environment, and that helps support steady revenue and earnings.

The company is also busy investing in its supply chain and operations, which can improve efficiency over time.

I think that combination makes it a reliable and defensive option when I'm thinking about income.

Foolish takeaway

If I were building a passive income portfolio, I would focus on businesses that can keep generating cash and returning it to shareholders over time.

These companies each bring something different, but they all have the ability to support income through a range of conditions, which is what I would look for in this part of the market.

Motley Fool contributor Grace Alvino has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Telstra Group. The Motley Fool Australia has recommended BHP Group. 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

An older couple use a calculator to work out what money they have to spend.
Dividend Investing

100,720 shares of this high-yield ASX dividend stock pay income equal to the Age Pension

Generating a full income from dividends sounds appealing, but how much do you actually need?

Read more »

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

2 ASX shares with dividend yields above 7%

Large yields could be very appealing right now.

Read more »

A woman has a thoughtful look on her face as she studies a fan of Australian 20 dollar bills she is holding on one hand while he rest her other hand on her chin in thought.
Dividend Investing

1 ASX dividend stock down 50% I'd buy

This ASX dividend stock has been under pressure. But looking ahead, there are signs the story could be starting to…

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Share Market News

How much do I need to invest in ASX shares to earn a $500 monthly passive income?

A $500 per month passive income is more achievable than you'd think.

Read more »

Growth of ASX share price represented by tiny beans stalk shooting up into the sky
Dividend Investing

3 ASX dividend shares I'd hold through anything

This trio has scale, resilience, and cash flow to endure market cycles.

Read more »

Two players on a field pump their fists in the air, indicating two of the best
Dividend Investing

Bell Potter names the best ASX dividend shares to buy

The broker has named these shares as best buys this month.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Down 40%: These high-yield ASX dividend shares are rated as buys

Brokers expect these buy-rated shares to offer 6% to 11% dividend yields.

Read more »

A young bearded man wearing a white t-shirt with a yellow backdrop holds up his arms to his chest and points to the camera in celebration of ASX shares rising today
Dividend Investing

1 ASX dividend stock up 20% that I'd hold through any market

I think this classic defensive ASX dividend company is a no-brainer buy and long-term hold.

Read more »