Aiming to earn $50,000 a year in passive income from your superannuation savings in your retirement years?
If you're a single homeowner, it's a decent figure to shoot for to provide a comfortable lifestyle in your golden years.
Now, there are a number of ways you can go about investing your superannuation to build that passive income stream.
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Investing in ASX dividend shares
In my opinion, investing in quality ASX dividend shares is the best way to secure a reliable passive income. Ideally these dividends will come with franking credits. Those give you credit for the taxes the companies you invest in have already paid on their profits.
Below we look at three S&P/ASX 200 Index (ASX: XJO) dividend shares that fit the bill.
Of course, a properly diversified passive income portfolio will hold more than just three ASX dividend stocks. While there's no right number for everyone, somewhere in the range of 15 is a decent figure to aim for.
Ideally you want to own companies that operate across a range of sectors and locations. This helps to reduce the risk that your passive income stream takes a big hit if a single sector or company runs into a rough patch.
So just how big a super balance do I need for a $50,000 annual passive income without drawing down that balance?
How much superannuation will I need?
The exact level of super savings you'll need will depend on the yield you get.
I believe the three ASX dividend stocks below provide a reasonable example of the dividend yield you could expect to achieve over the longer-term. And, of course, we'll be hoping the share prices of the companies we invest in go up as well.
So, without further ado, the first ASX 200 dividend share I'd invest some of my superannuation in is Woodside Energy Group Ltd (ASX: WDS).
Over the past 12 months, the ASX 200 oil and gas stock has paid (or will shortly pay) two fully franked dividends totalling $1.63 per share.
At the recent Woodside share price of $32.13, Woodside trades on a fully franked dividend yield of 5.1%. The Woodside share price has gained around 24% over the full year.
The second ASX 200 dividend stock I'd buy is rail freight operator Aurizon Holdings Ltd (ASX: AZJ).
Over the past 12 months, Aurizon has paid (or will shortly pay) two dividends, 90% franked, totalling 23 cents a share. At the recent Aurizon share price of $3.72, the stock trades on a dividend yield of 6.2%. The Aurizon share price is up around 17% over the past 12 months.
And the third dividend stock I'd buy with my superannuation savings is ANZ Group Holdings Ltd (ASX: ANZ).
Over the past 12 months, the ASX 200 bank stock has paid two partly franked dividends totalling $1.66 a share. At the recent ANZ share price of $38.00, ANZ trades on a partly franked dividend yield of 4.4%. The ANZ share price is up around 16% over a year.
So, if I were to invest a similar amount in each of the above ASX 200 dividend stocks, I could expect to earn a yield of 5.2%, with tax benefits from those franking credits.
For my $50,000 annual passive income, I'd need around $956,000 in superannuation savings.
