If I were to retire with half a million dollars in superannuation savings, just how much passive income might I expect to earn each year?
It's a question a lot of Aussies are asking themselves. Whether they're close to retirement or still have many years to build up their super balance.
And, with history as our guide, the long-term answer is generally the same for folks looking to retire tomorrow or in 30 years.
Now, what we're interested in here is the annual passive income that you can earn from your superannuation without drawing down on the existing $ 500,000 balance. That way, your income stream doesn't shrink over time.
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How do I create a reliable annual passive income stream?
While there are a few ways you might go about this, in my opinion buying the right basket of ASX dividend shares is the best path to achieving a reliable passive income stream in your golden years.
Atop their dividend payments, we're also hoping to see some reasonable share price gains over time. Or at least enough to offset the impact of inflation on your superannuation investment and the resulting income stream.
While not written in stone, I'd tend to invest my superannuation savings in the larger end of the market, with stocks listed on the S&P/ASX 200 Index (ASX: XJO). These are normally less volatile than smaller dividend stocks. And you can screen for companies with reliable track records of making two (or more) dividend payouts each year.
I also prefer buying ASX dividend shares with franking credits. These give you credit for the taxes the companies you own have already paid on their profits.
Now, we'll look at three quality ASX 200 dividend stocks that fit this bill below.
Just take note that the yields you often see are trailing yields. Future yields may be higher or lower depending on a range of company specific and macroeconomic factors.
And, of course, a properly diversified income portfolio will contain more than just three stocks.
With that said…
Investing that $500,000 of superannuation savings
The first quality ASX 200 dividend stock I'd consider buying is Bank of Queensland Ltd (ASX: BOQ).
Over the past 12 months, the ASX 200 bank stock has paid out a total of 55 cents a share in fully franked dividends (including a special dividend). At Thursday's share price of $6.38, Bank of Queensland shares trade on a fully franked dividend yield of 8.6%.
The second stock I'd consider investing part of my $500,000 of superannuation into is Telstra Group Ltd (ASX: TLS).
Over the past 12 months the ASX 200 telco has paid (or shortly will pay) 21 cents a share in dividends, franked at 90%. At the recent Telstra share price of $4.58, the stock trades on a dividend yield of 4.6%.
And the third ASX 200 stock I'd target with my superannuation savings is Fortescue Ltd (ASX: FMG).
Over the past 12 months, the ASX 200 mining giant has paid (or soon will) a total of $1.08 a share in fully franked dividends. At the recent share price of $17.63, Fortescue shares trade on a fully franked dividend yield of 6.1%.
So, if you were to invest an equal amount of your superannuation savings into each of these three ASX 200 dividend stocks, you could expect to receive an average yield of around 6.4%.
Meaning your half million-dollar investment should see you earning $32,167 a year in passive income without drawing down that super balance.
