A lot of investors may look at residential property as the preferred option to buy into real estate. But I believe that ASX commercial property investments – which are called REITs – look more attractive today.

Higher interest rates are a headwind for REITs because they increase the cost of debt (interest costs) and weigh on property valuations. But now that the REIT unit prices have dropped, I think it's a great time to invest and be patient until rates start coming down again.

Let me tell you about two of my preferred ideas in the sector.

Compelling options in the REIT sector

Charter Hall Long WALE REIT (ASX: CLW) owns a diversified portfolio of properties across a variety of subsectors, including service stations, hotels, government-tenanted buildings (such as Geoscience Australia), healthcare, distribution centres, telecommunication exchanges, data centres, and plenty more.

I like the diversified nature of the portfolio because it lowers the risk of being too exposed to one sector and it helps it search across real estate sectors for the best opportunities.

Centuria Industrial REIT (ASX: CIP) owns a portfolio of industrial properties across Australian cities.

Industrial property is exposed to a number of demand factors such as growing e-commerce adoption, rising refrigerated space requirements (for food and medicine), data centres, the onshoring of supply chains, and so on. These are good drivers for rental income.

In-built rental growth

I believe certain ASX REITs have compelling potential for rental income growth in the coming years, which can help drive property valuations higher and help fund larger distributions.

Charter Hall Long WALE REIT's rental agreements either have fixed annual increases or inflation-tracking rental increases. That's a pleasing, steady drumbeat of rental growth each year. Its weighted average lease expiry (WALE) is now around nine years, which provides long-term income security.

Centuria Industrial REIT's rental potential has increased significantly over the last few years thanks to the growth in demand and very low vacancy rates. In the FY27 first-quarterly update, Centuria Industrial REIT said that its portfolio was 17% under-rented, so there's a significant runway for future earnings growth as those contracts come up for renewal.

Centuria Industrial REIT's WALE is close to seven years, which is also a long time and provides rental security.

Large asset discounts

Each of these ASX REITs is trading at large discounts, making them seem very appealing to me.

Charter Hall Long WALE REIT reported in August that its June 2026 net tangible assets (NTA) per unit was $4.71. At the time of writing, the unit price of $3.38 is trading at a 28% discount to that NTA.

The Centuria Industrial REIT reported in August that its June 2026 NTA was $4.01 per unit. At the time of writing, the unit price of $2.86 is trading at a 29% discount to that NTA.

Large distribution yields

The final positive piece of the puzzle I want to highlight is the large distribution yields, partly thanks to the significant discounts they trade at.

Charter Hall Long WALE REIT plans to maintain the distribution in FY27 at 25.5 cents per security, the same as FY26, which represents 100% of its operating earnings, which is sustainable. That translates into a forward distribution yield of 7.5%.

Centuria Industrial REIT expects to grow its annual distribution by 3% to 17.3 cents, which is less than 100% of its operating earnings, making it sustainable. That translates into a forward distribution yield of 6%.

Overall, there's a lot to like about these two ASX REITs, and I'm thinking about investing in both of them in the coming months.

The post 2 ASX REITs I'd buy for hefty income appeared first on The Motley Fool Australia.

Superannuation comes with a number of benefits for individuals who work full-time, such as a lower tax rate on investment earnings. Plus, concessional (including the regular, mandatory) contributions are only taxed at 15% rather than at someone's normal tax rate (which could be 30% or more). In retirement, superannuation earnings could be taxed at 0%, depending on the size of the superannuation balance.

When you put all of that together, an individual can build significantly more wealth inside superannuation rather than outside of superannuation, with less of a tax headwind.

It's beneficial to build a passive income stream inside superannuation because less of the return is lost to tax each year. It's the net income (after tax) that investors can utilise. A lower tax rate in superannuation makes passive income more appealing.

Considering how every household's tax position may be different, I won't focus on the tax benefits for the rest of the article and just look at what it would take to unlock $9,500 of monthly passive income from superannuation.

The required portfolio size

Receiving $9,500 per month equates to $114,000 annually. For a lot of people, that'd be a very welcome level of investment cash flow in 2026 to pay for life's expenses.

To receive that much in dividends, it depends on the dividend yield of the portfolio.

For example, with a 1% dividend yield, someone would need a portfolio size of $11.4 million. But with a 10% dividend yield, someone would need a portfolio size of $1.14 million. I wouldn't suggest a yield as low as 1% because that's not appealing, while a huge dividend yield may not be sustainable.

Higher yields may not see much payout growth. Inflation could eat away at the buying power of $114,000, so it'd be good to choose investments with rising payouts rather than flat payouts.

Let's look in the middle.

With a 5% dividend yield, an investor would need $2.28 million to generate the desired dividends.

With a 4% dividend yield, the superannuation portfolio would need to be $2.85 million in size.

If the dividend yield was 6%, the superannuation balance would need to be $1.9 million.

Finally, if the dividend yield was 7%, the portfolio would need a superannuation balance of $1.63 million.

What ASX dividend shares could provide those sorts of yields?

If I relied on passive income in retirement from ASX shares, I'd want to own ASX shares that have a history of growing or maintaining their payouts.

When it comes to the ASX shares I'm expecting to pay a yield of approximately 4% to 6% in FY27 (including any potential franking credits), I'd look at names like Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), L1 Long Short Funds Ltd (ASX: LSF), and Coles Group Ltd (ASX: COL).

ASX shares that could pay a dividend yield of more than 6% (including franking credits) in FY27 that I like, include MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG), Charter Hall Long WALE REIT (ASX: CLW), Future Generation Global Ltd (ASX: FGG), Future Generation Australia Ltd (ASX: FGX), and PM Capital Global Opportunities Fund Ltd (ASX: PGF).

I'm a shareholder in a number of the above ASX shares, such as L1 Long Short Fund, MFF Capital and WCM Global Growth, because of my confidence in the reliability of the dividends.

By building up a superannuation balance, investors can unlock significant passive income of $9,500 or more per month.

The post How much is needed in superannuation to target a $9,500 monthly passive income? appeared first on The Motley Fool Australia.

There are plenty of compelling options on the ASX for distributions such as Scentre Group (ASX: SCG), Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI) and Rural Funds Group (ASX: RFF).

There are a few things that make Charter Hall Long WALE REIT stand out as a compelling option for passive income.

Let's run through those positives and consider how much passive income a $6,000 investment could unlock.

Generous dividend payout ratio

One of the biggest factors that determines how large an ASX share's dividend yield is relates to the dividend payout ratio. In the case of an ASX REIT, it's the distribution payout ratio.

The metric tells investors how much of its profit it's paying out as passive income. The higher the payout ratio, the larger the yield will be. However, that means less money is retained in the business.

Charter Hall Long WALE REIT currently operates with a 100% distribution payout ratio, meaning all of the rental profit each year is paid to investors.

Large distribution yield

The other factor that determines the distribution yield is the valuation. For REITs, I think it's useful to look at whether there's a discount between the unit (share) price and the net tangible assets (NTA) per unit.

The NTA includes the property values, the size of the loans, the cash and so on.

As at 30 June 2026, the business reported that its NTA was $4.71. At the time of writing, it's trading at a 30% discount to NTA.

Due to that huge discount, the distribution yield is particularly high.

It has guided that it will pay a distribution of 25.5 cents per security, which is a distribution yield of 7.75%, at the time of writing.

Diversified portfolio

The ASX REIT owns a variety of properties in its portfolio, which is a great element of the business considering how that gives it a wide array of investment opportunities and reduces risk exposure.

Its investments include government tenants (such as GeoSciences Australia), hotels, grocery and distribution, telecommunication exchanges, data centres, service stations, banking and professional services, food manufacturing, healthcare, Bunnings properties and more.

Organic growth of rental income

Despite headwinds from higher interest rates, the business forecasts that it can maintain its distribution in FY27. I think an important part of that is that it has built-in rental growth.

In FY26, the business reported 3.1% average annual net property income growth, with 54% of lease rent increases being CPI-linked and the rest being fixed increases.

Regular income growth is a tailwind for future growth in the distribution and property prices, particularly as interest rates begin to decline again.

$6,000 investment in the ASX REIT

An investment of $6,000 in Charter Hall Long WALE REIT could unlock plenty of passive income in FY27. That would allow someone to buy 1,829 units of the ASX REIT.

Based on the FY27 projected payout, the total distribution could be $466.40. I'd be happy to make that investment today.

The post If I buy $6,000 of this top ASX REIT, how much dividend income will I receive in 2027? appeared first on The Motley Fool Australia.

There's a lot to like about international share market investments such as iShares S&P 500 AUD ETF (ASX: IVV). However, with a dividend yield of around 1%, it's not a compelling contender for cash payments.

Thankfully, on the ASX there are a number of impressive candidates with huge dividend yields. Despite higher interest rates this year, the following two stocks are expected to provide reliable payments for FY27.

Universal Store Holdings Ltd (ASX: UNI)

This ASX dividend share owns a portfolio of premium youth fashion brands.

Its businesses are Universal Store, Perfect Stranger and CTC (trading as the THRILLS and Worship brands). At the latest count, the company had 123 physical stores in Australia.

Despite generally tougher retail conditions, the company was able to increase group sales by 12.9% in FY26 thanks to 11.5% growth in sales for Universal Store to $313.3 million and Perfect Stranger sales growth of 40.8% to $35.9 million.

The company added five new Universal Store locations during FY26 to reach 88, as well as seven new Perfect Stranger stores to reach 26. It has aspirations to reach 100 or more Universal Store locations and a goal of 60 Perfect Stranger stores.

Universal Store's profit margins are increasing, demonstrating operating leverage, enabling its profit lines to grow faster than revenue. The FY26 gross profit margin increased 140 basis points to 62.5%, while the underlying net profit grew 16.3% to $40.5 million.

The ASX dividend share hiked its FY26 payout by 11.7% to 43 cents per share. The projection on Commsec suggests the business could slightly increase its payout to 45 cents per share in FY27.

If that projection becomes reality, it'd be a grossed-up dividend yield of 8%, including franking credits, at the time of writing.

Charter Hall Long WALE REIT (ASX: CLW)

The other ASX dividend share I want to highlight is the real estate investment trust (REIT) Charter Hall Long WALE REIT, which owns a diversified portfolio of commercial properties across Australia.

One of the best things about the business is that it has long rental contracts with the REIT. The business currently has a weighted average lease expiry (WALE) of around nine years, which means it already has significant rental income locked in for the next decade.

Depending on the specific lease agreement, rental income is growing either in line with inflation or by a fixed rate. I think that's a key factor in helping support the distribution in FY27. In the coming years, I expect passive income growth to return.

The business expects to pay an annual distribution of 25.5 cents per security in FY27, the same as FY26. That equals a distribution yield of 7.8%.

With a portfolio across service stations, hotels, industrial properties, government-related buildings, food manufacturing and so on, I think it has effectively diversified the risks of being too exposed to one sector.

It seems to be trading at a significant discount to its underlying net tangible assets (NTA). Therefore, I think it's a good time to invest while the market is negative on REITs.

The post Get paid huge amounts of cash to own these ASX dividend shares appeared first on The Motley Fool Australia.

Figures from industry analyst Chant West show that since the introduction of mandatory superannuation in the early 1990s, the median growth fund has returned 8% per year, well above the inflation rate over that period.

The big question is, how much superannuation do you need?

Of course, that depends on what sort of income stream you'd like in retirement, and whether you can afford to save enough during your working life to set yourself up.

Having a goal in mind is the first step, so let's see what it would take to generate $80,000 per year in income from your superannuation.

How much in superannuation savings do you need for $80,000 per year in income?

For simplicity's sake, I will calculate this based on dividends alone. However, once people start to draw down on their superannuation, it is, in practice, usually a combination of dividends and share sales (capital gains) that creates the income stream.

To calculate how much you will need to generate $80,000 per year, you need to make an assumption about how much you can expect to earn from dividends, or the average dividend yield.

I would argue that with the benefit of franking credits a return of about 7.5% is realistic.

Franking credits pay back a shareholder for the company tax already paid, which is 30% for a fully franked dividend.

In practice this means that a 5% fully franked dividend is worth 7.14% once credits are taken into account for retirees who pay a zero per cent tax rate.

Not all shares you own need to pay this rate. Some can be lower-dividend, higher-growth shares, while some can be high-dividend payers.

Which shares could I buy to generate an $80,000 income stream?

An example of the latter is some infrastructure stocks such as Atlas Arteria Ltd (ASX: ALX), which is currently paying a trailing dividend of 7.6%, albeit without franking.

In the financial services sector, Morgan Stanley predicts Bank of Queensland Ltd (ASX: BOQ) will pay at least a 6% dividend in FY28, while Regal Partners Ltd (ASX: RPL) is paying a trailing dividend of almost 13%.

Among the major retailers, the dividend yields are a bit lower, with Woolworths Group Ltd (ASX: WOW) paying 2.35% and Coles Group Ltd (ASX: COL) 3.27%, although they do come with the security of large, stable markets.

Real estate investment trusts can also be good dividend payers, with Arena REIT (ASX: ARF) paying 7.6%, Charter Hall Long Wale REIT (ASX: CLW) paying 7.84%, while Waypoint REIT (ASX: WPR) pays 8.18%.

The post How much is needed in superannuation to target $80,000 a year in passive income? appeared first on The Motley Fool Australia.

Strength and stability are reassuring factors for investors seeking a strong dividend each year, even through tougher economic conditions.

With that in mind, I want to highlight the two stocks below as contenders for passive income.

Charter Hall Long WALE REIT (ASX: CLW)

Rental income is predictable and locked in thanks to the terms of lease agreements. This makes certain real estate investment trusts (REITs) very attractive.

Charter Hall Long WALE REIT has a diversified portfolio of properties. Within that portfolio are long-term leases.

It has a weighted average lease expiry (WALE) of around nine years, which is a long time and provides significant rental security.

The REIT has an occupancy rate of around 100%. Approximately 99% of the portfolio is leased to blue-chip tenants such as government entities, Endeavour Group Ltd (ASX: EDV), Telstra Group Ltd (ASX: TLS), BP, Coles Group Ltd (ASX: COL), Metcash Ltd (ASX: MTS), David Jones, Westpac Banking Corp (ASX: WBC), Arnott's Group and Sonic Healthcare Ltd (ASX: SHL).

It's those sorts of tenants that can provide investors with commendable reliability during all economic conditions.

I like the areas of the commercial market the REIT is invested in, including hotels, grocery and distribution, telecommunications exchanges, data centres, service stations food manufacturing, healthcare and more.

Despite the headwind of higher interest rates, the ASX blue-chip share is expected to maintain its operating earnings per security (EPS) of 25.5 cents in FY27. The business plans to pay a 100% distribution payout ratio, so the distribution is also expected to be 25.5 cents per security.

The likely payout for the 2027 financial year translates into a forward distribution yield of 7.8%.

Australian United Investment Company Ltd (ASX: AUI)

Another ASX blue-chip share that looks compelling is this listed investment company (LIC) with a long history of paying dividends.

It was founded in 1953 and it invests in both ASX shares and international shares. It aims to provide sustainable dividend income over the long-term.

At the end of September 2026, its largest holdings were Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO), CSL Ltd (ASX: CSL), ANZ Group Holdings Ltd (ASX: ANZ), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) and Transurban Group (ASX: TCL).

The LIC has an incredibly low management expense ratio of 0.09% which is one of the lowest-costing portfolios in Australia.

The ASX blue-chip share has paid a dividend every year since its listing in 1974 and has maintained or increased its dividend each year since 1994.

In FY27, it plans to pay 37 cents per share of ordinary dividends and a special dividend of 8 cents per share. The total dividend per share of 45 cents translates into a grossed-up dividend yield of 5.4%, including franking credits, at the time of writing.

It currently trades at a 14% discount to the net tangible asset (NTA) per share, as of September 2026. This discount makes the valuation look attractive to me.

The post 2 ASX blue-chip shares offering large dividend yields appeared first on The Motley Fool Australia.

Since the start of October, Arena REIT (ASX: ARF), Charter Hall Long WALE REIT (ASX: CLW), HomeCo Daily Needs REIT (ASX: HDN), Waypoint REIT (ASX: WPR), GPT Group Ltd (ASX: GPT), Vicinity Centres Ltd (ASX: VCX), and BWP Group Ltd (ASX: BWP) have all hit 12-month lows, with the dips concurrent with the RBA's rates decision.

Low share prices translating to good yields

Each of these real estate companies is now trading with a healthy trailing dividend yield. The question will be, can they maintain it?

Examples of some of these yields include Charter Hall at 7.94% unfranked and HomeCo at 8.03% unfranked.

Arena REIT is trading with a trailing yield of 7.76%. The company, in releasing its full-year results in August, gave guidance of 18 cents per share in distributions for the current financial year, which, at the current share price, would be a yield of 7.4%.

However, this estimate assumed the company would derive no income from the Arena properties occupied by Edge Early Learning Centres, which had entered administration.

Arena has subsequently told the ASX that all 27 of these properties are in the process of being leased to new owners; however, the deals are yet to settle.

As such, no dividend or guidance update has been made.

Interest rates a key focus

With real estate companies generally having large amounts of debt, their share prices could once again come under pressure if the RBA lifts interest rates again at its next meeting on 3 November.

ANZ Senior Economist Jasmine Zheng said this week a rate rise was "more likely than not", while Betashares Chief Economist David Bassanese was also predicting a hike.

The RBA's minutes from the meeting on October 6 indicated that further rate rises could be on the cards.

As they said:

Members discussed the challenges of judging how large the upside risks to inflation were or could become. They noted that the outlook for inflation would depend, among other things, on developments in the Middle East, the path of external demand, the extent of domestic capacity pressures and on how that influenced the pass-through of cost shocks and the evolution of inflation expectations. Members noted that it was possible these factors could continue to place upward pressure on inflation. Against that backdrop, members agreed that they would remain attentive to incoming data and the evolving assessment of the outlook and risks when making their decisions.

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Lower taxes in the wealth-building phase and potentially no taxes in the retirement phase (depending on the superannuation balance) are a very compelling proposition. An Australian (retiree) investor is likely better off in net income terms to have dividends flow through superannuation than in their own name.

Everyone has a different taxation position, so I'm not going to focus on tax for the rest of the article.

What's needed for $7,500 of monthly passive income?

I'd bet that many Australians would love to have $7,500 of passive income hit their bank account every month. In annual terms, that's $90,000 per year of dividends.

The required superannuation balance to generate $90,000 in annual dividends depends on the portfolio's dividend yield. It's a similar situation to the interest rate required from a term deposit or savings account.

With a 5% yield, someone would need a $1.8 million portfolio (ignoring tax) to make $90,000 per year.

With a 6% yield, an investor would need a $1.5 million portfolio to make $90,000 per year, or $7,500 per month.

With a 4% yield, an investor would need a $2.25 million portfolio for the passive income goal.

I often talk about my appreciation of the diversified investment conglomerate Washington H. Soul Pattinson and Co Ltd (ASX: SOL) as an option for reliable dividends, but its grossed-up dividend yield, including franking credits, is only around 3.5% right now.

There are plenty of ASX dividend share options that can provide a higher dividend yield, so let's run through some of the possibilities.

ASX dividend share ideas

How good would it be to have a portfolio of stocks in superannuation with dividend yields of 5%, 6%, or even more to generate the monthly passive income?

Charter Hall Long WALE REIT (ASX: CLW) is a real estate investment trust (REIT) that owns and leases various types of property, including service stations, hotels, telecommunication exchanges, distribution centres, and government-related buildings (such as Geosciences Australia). It expects to pay 25.5 cents per security in FY27, which translates to a yield of 7.8%.

Another idea is listed investment company (LIC) L1 Long Short Fund Ltd (ASX: LSF), which uses a combination of normal investing and short selling to look for opportunities across both ASX shares and international shares. It's increasing its dividend every quarter and could pay a grossed-up dividend yield of 5.1% in FY27, including franking credits.

Next, I want to highlight another REIT called Centuria Industrial REIT (ASX: CIP), which owns a portfolio of industrial properties across Australian cities. It's growing its distribution by another 3% in FY27 despite the higher interest rates, thanks to rising demand for industrial land for uses like distribution centres (including e-commerce purposes), refrigerated space (for food and medicine), and data centres. Its forecast yield is 6.1%.

Another name I'd highlight is the LIC MFF Capital Investments Ltd (ASX: MFF), which is increasing its payout every six months. It largely invests in strong international shares with good prospects for dividend growth. I expect it will pay an annual dividend of 25 cents per share in FY27, translating into a grossed-up dividend yield of 6.9%, including franking credits.

A portfolio of the above names, as well as other ASX shares, could be compelling to unlock a monthly passive income of $7,500 (or more) in superannuation.

The post How much is needed in superannuation to target a $7,500 monthly passive income? appeared first on The Motley Fool Australia.

It sits above the $630,000 balance that the Association of Superannuation Funds of Australia (ASFA) thinks every Australian needs for a comfortable retirement, and below the asset cut-off point for a part Age Pension payment.

This amount of money means you'll be able to live well when you decide to stop working. But if you invest that money wisely, it could also generate an additional passive income that'll turn a comfortable retirement lifestyle into an affluent one. 

Think frequent travel, luxury property, and flexible discretionary spending.

So, how much passive income can you earn off a $700,000 superannuation balance?

And what ASX shares could you invest in?

Let's take a look.

The calculation

There is a straightforward calculation to work out what passive income a $700,000 passive income could generate.

If you multiply your total superannuation balance by the overall dividend yield of your portfolio, it'll give you the passive income you could generate.

The answer changes depending on your dividend yield, which helps you identify what you need to invest in to earn the income you want. 

Generally, as your yield goes up, the passive income you can earn off the same balance also increases.

How much could I earn off a 2% to 3% yielding superannuation portfolio?

A 2% yielding portfolio is at the lowest end of the scale. Off a $700,000 superannuation balance, you'd generate around $14,000 in passive income. That's because $700,000 x 2% = $14,000 in dividend payments.

It's not a huge amount, but the benefit of a super low yielding portfolio is that this would generally be focused on traditional and reliable blue-chip shares rather than towards high-growth ASX stocks.

Think Woolworths Group Ltd (ASX: WOW), Macquarie Group Ltd (ASX: MQG), and even CSL Ltd (ASX: CSL). These shares are each huge in scale, have a long history of paying dividends to shareholders, and they yield somewhere in the 2% to 2.5% range, at the time of writing.

On a 3% yielding portfolio, you could earn a little more, at closer to $21,000 per year in dividend income, off the same balance.

Stocks around the 3% level typically offer investors a balance between a moderate, reliable passive income, and some capital growth potential.

Think Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), and Wesfarmers Ltd (ASX: WES). These powerhouses all offer a yield of around 3% to 3.5% at the time of writing.

What about a 4% to 5% yielding superannuation portfolio?

If your superannuation portfolio yields closer to 4% or 5%, you could earn even more, at closer to $28,000 or $35,000 per year in passive income, respectively.

This is often considered by investors as the "sweet spot" between stability and growth. Companies in this bracket are typically large-scale blue chips, major banks, or defensive infrastructure shares. 

For example, Rio Tinto Ltd (ASX: RIO), Medibank Private Ltd (ASX: MPL), National Australia Bank Ltd (ASX: NAB), ANZ Group Holdings Ltd (ASX: ANZ), Westpac Banking Corp (ASX: WBC), Deterra Royalties Ltd (ASX: DRR), Transurban Group (ASX: TCL), and Telstra Group Ltd (ASX: TLS) all yield around this bracket, at the time of writing.

What about higher yielding ASX shares, around the 6% to 8% level?

It's possible to earn even more if your superannuation investment portfolio is high yield, but this comes with a lot more risk. Investors would need to accept lower growth, or potentially even share price declines, in place of a higher passive income.

There are still plenty of options around this level, though.

Some examples are Harvey Norman Holdings Ltd (ASX: HVN), Premier Investments Ltd (ASX: PMV), or Nick Scali Ltd (ASX: NCK). 

Real Estate Investment Trusts (REITS) also typically offer a higher yield thanks to their predictable rental income. Such as, Charter Hall Long WALE REIT (ASX: CLW), Waypoint REIT Ltd (ASX: WPR), and HomeCo Daily Needs REIT (ASX: HDN).

The post How much passive income can I earn off a $700,000 superannuation balance? appeared first on The Motley Fool Australia.

If I'm working full-time and want to invest, putting money into shares in my own name could mean paying at least 30% tax on investment returns. Investing through superannuation could mean paying a tax rate of half that.

One of the main perceived negatives of superannuation is that the money is locked away for so long. It's true that the money contributed to superannuation may not be accessible for decades. But that's the point – we're saving for retirement.

With mandatory contributions (and possibly topped up by additional amounts), investors can build towards a very pleasing net worth.

When it comes to building annual passive income, tax can play an important part because the income we can spend/invest is what we earn after tax. So, the tax rate affecting our investments is important.

Reaching $100,000 in annual passive income can be assisted by using superannuation, due to lower taxes during the accumulation phase and in retirement. Investing in our own name as an individual can come with higher taxes throughout life compared to the superannuation tax rate.

Let's look at what is needed to make $100,000 of dividends within superannuation, while ignoring tax from now on because everyone has a different tax position.

Dividend yields are important

Any share investment that pays a dividend has a dividend yield.

That dividend yield is decided by how much of its annual earnings it pays out – the dividend payout ratio – and the valuation of the business.

A business can be valued in many ways, such as its price-earnings (P/E) ratio, the price-to-book ratio, and so on. The more expensive an asset is, the lower the dividend yield becomes.

Investors seeking dividend income will probably hunt for a solid dividend yield, but I think yields can be excessive if the dividend payout ratio gets too high, so I wouldn't fill my portfolio with the highest yields I can find.

How large an investment balance needs to be to generate $100,000 of annual passive income depends on the dividend yield.

For example, if a portfolio had a dividend yield of 4%, it would need to be $2.5 million in size.

If the portfolio had a 5% dividend yield, it would need to be a $2 million portfolio.

A portfolio with a 6% dividend yield would require a $1.67 million portfolio.

Each portfolio yield comes with a different target, so it depends on what sorts of ASX shares investors buy.

So, let's run through some businesses with their dividend yields.

Examples of top ASX shares with their dividend yields

I think investors should focus on the forecast upcoming payments where possible, rather than the past dividends. Forecasts are either from CMC Invest or the business itself. So, I'll largely be looking at forecast grossed-up dividend yields, including franking credits if that's relevant.

First, I'll mention a couple of blue chips for superannuation dividend investing. In FY27, Coles Group Ltd (ASX: COL) is forecast to pay a grossed-up dividend yield of 5.2%, and Telstra Group Ltd (ASX: TLS) is projected to pay a grossed-up dividend yield of 6.5%.

Real estate investment trust (REIT) yields are looking particularly appealing following elevated interest rates. For example, Centuria Industrial REIT (ASX: CIP) is projected to pay a distribution yield of 6.2%, and Charter Hall Long WALE REIT (ASX: CLW) is forecast to pay a distribution yield of 7.8%.

Finally, I'm a big fan of compelling investment businesses with good investment strategies. Three of my favourites include Washington H. Soul Pattinson and Co Ltd (ASX: SOL), with a current grossed-up dividend yield of 3.4%, L1 Long Short Fund Ltd (ASX: LSF), with a current grossed-up dividend yield of 4.5%, and MFF Capital Investments Ltd (ASX: MFF), with a current grossed-up dividend yield of 6.7%.

The above ASX shares, and others, could be great contenders to produce an annual passive income of $100,000.

The post How much is needed in superannuation to target a $100,000 annual passive income? appeared first on The Motley Fool Australia.

Uncertainty in the wider economy and higher interest rates have pushed share prices lower and, in turn, sent dividend yields higher.

With that in mind, there are a few high-yield names that come to mind, and the two below are among the most attractive.

Charter Hall Long WALE REIT (ASX: CLW)

The first business I want to highlight is this real estate investment trust (REIT), which has a highly diversified portfolio spanning sectors such as service stations, hotels, office buildings, Bunnings properties, and distribution centres.

Higher interest rates are particularly a headwind for REITs because they increase the cost of debt (which REITs tend to have), and it's a headwind for property valuations. But I don't expect interest rates to stay this high forever, meaning that this is a useful time to invest.

The Charter Hall Long WALE REIT unit price has dropped 24% in the past year (at the time of writing), but I don't think the underlying business is worth 24% less than it was before.

It has several positive factors, including a weighted average lease expiry (WALE) of around 9 years, which provides long-term rental income security. That rent is regularly growing thanks to a mixture of fixed annual increases and inflation-linked increases.

The business plans to maintain its annual distribution at 25.5 cents per unit in FY27, which translates into a forward distribution yield of 8.4%.

WAM Microcap Ltd (ASX: WMI)

This listed investment company (LIC) is the other ASX passive income share idea that I want to highlight with a huge dividend yield.

LICs are a great structure because they allow investors to gain exposure to a portfolio of shares and can turn some of the generated investment profits into a steady (or growing) dividend.

WAM Microcap looks to invest in the smallest businesses on the ASX, ones with a market capitalisation under $300 million at the time of investment.

The LIC grew its regular annual dividend each year between FY18 and FY23, maintained it in FY24, and grew it slightly in FY25 and FY26.

Its FY26 annual dividend per share of 10.7 cents translates into a huge grossed-up dividend yield of 11.75%, including franking credits, at the time of writing. While the business only grew its annual dividend by 1% in FY26, any increase is useful when you're talking about a double-digit yield.

WAM Microcap needs to keep delivering investment returns to grow its dividend, but its current profit reserve covers more than four years of payments at the current level.

$600 of passive income per month

Between the two stocks above, the average dividend yield is around 10%, including franking credits.

To reach $600 per month in income, we should set an annual goal, since they don't pay monthly. The target is $7,200 per year. For that level of income, an investor would need around $72,000 invested in the two names above.

But I'd suggest spreading investment dollars across additional ASX share ideas that can generate returns, rather than putting too much in just two names.

The post 2 ASX passive income share ideas I'd use to generate $600 a month in 2027 appeared first on The Motley Fool Australia.

Compounding is a very powerful tool that can help grow a dollar into significantly more over the years.

We don't need to run these businesses ourselves. That's up to management and all other staff at those companies.

Whether that's some of the world's biggest companies or some of the up-and-coming ASX shares, we can invest in ideas that can grow over time.

By regularly investing, spending less than we earn, and possibly using superannuation, an Aussie can build a very rewarding level of annual passive income.

Let's get into what it would take if someone wants to reach $85,000 of investment income each year by 50.

Compounding and building wealth

Compounding helps accelerate our net worth because we don't need to add as much money to reach a financial goal.

For example, if someone invested $500 per month and it returned 10% per year, it would be worth $1.09 million after 31 years. About $905,000 of that total would come from returns, and only $186,000 would come from the actual deposits.

But I'm sure readers wanting to retire at 50 will want to reach their goal faster than 31 years.

So, let's assume share market investments continue to return an average of around 10% and run through a few scenarios.

First, let's double the monthly investment to $1,000 and see what happens then.

By investing $1,000 per month, a 25-year-old investor could reach $1.18 million after 25 years.

If someone aged 30 invested $2,000 per month, they could reach a portfolio value of $1.375 million.

Maybe someone is aged 35 and they have just 15 years to reach 50. Let's imagine that person saves really hard and invests $3,500 per month. That could reach $1.33 million in that time.

Everyone has a different financial position, so I don't know how much each household can save, but the above shows how people can regularly put money toward their net worth and eventually retire early.  

Unlocking $85,000 a year of annual passive income

Getting $85,000 each year would be a very good amount to retire on.

However, it would require investors from the above examples to target solid grossed-up dividend yields which typically include franking credits.

For example, accessing $85,000 on a $1.18 million portfolio means finding a 7.2% dividend yield. The sorts of businesses I'd target for that yield include Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG), Charter Hall Long WALE REIT (ASX: CLW), Dexus Industria REIT (ASX: DXI) and WCM Global Growth Ltd (ASX: WQG).

The other end of my target was generating $85,000 from a $1.375 million portfolio. This works out to be a dividend yield of 6.2%. With that target in mind, I'd look at stocks like MFF Capital Investments Ltd (ASX: MFF), Centuria Industrial REIT (ASX: CIP), and
PM Capital Global Opportunities Fund Ltd (ASX: PGF).

By mixing a portfolio of good local shares and international exposure, retirees can build a pleasing stream of passive income, such as $85,000 by age 50.

The post How much do I need to retire on $85,000 a year at 50? appeared first on The Motley Fool Australia.

The S&P/ASX 200 Index (ASX: XJO) is rallying 0.5% after experiencing its worst one-day fall in six months yesterday.

However, the real estate sector is in the red and the worst performer of the bourse today, down 1.6%.

ASX REIT share prices are being weighed down by expectations of further interest rate rises in Australia, the US, and elsewhere.

Higher rates can affect REITs' financing, drag property values down, and make cash and fixed income investments more appealing.

Strong bond yields are also a headwind because they can raise financing costs and attract investment away from REITs.

With all that said, some brokers maintain buy recommendations on ASX REITs, while others recommend caution.

Let's investigate.

1. Arena REIT No 1 (ASX: ARF)

The Arena REIT No 1 share price is $2.02, down 0.5% today and down 43% in 2026. 

Over the past month, this REIT has fallen 10%.

Ord Minnett upgraded Arena REIT No 1 shares to a buy rating on 9 September.

The broker trimmed its 12-month price target from $2.85 to $2.75.

This implies 36% potential growth ahead.

2. Charter Hall Long WALE REIT (ASX: CLW)

The Charter Hall Long WALE REIT share price is $3.20, down 1.1% today and down 22% in 2026. 

Over the past month, this ASX REIT has declined 9%.

Morgan Stanley reiterated its hold call with a price target of $4.06 on 22 September.

This implies 27% potential upside ahead.

3. BWP Group (ASX: BWP)

The BWP Trust share price is $3.51, down 0.7% today and down 11% in 2026. 

Over the past month, this ASX REIT has dipped 5%.

UBS reaffirmed its hold rating with a 12-month price target of $3.80 on 9 September.

This implies an 8% potential upside ahead.

4. Charter Hall Retail REIT (ASX: CQR)

The Charter Hall Retail REIT share price is $3.44, down 1.3% today and down 16% in 2026. 

Over the past month, this REIT has fallen 13%.

Macquarie upgraded Charter Hall Retail REIT shares to a buy call on 30 September.

The broker has a 12-month price target of $4.18.

This implies 22% potential upside ahead.

5. Centuria Industrial REIT (ASX: CIP)

The Centuria Industrial REIT share price is $2.74, down 1.3% today and down 17% in 2026. 

Over the past month, this ASX REIT has fallen 8%.

Macquarie upgraded Centuria Industrial REIT shares to a buy rating on 30 September.

The broker's target is $3.02, implying a potential 10% upside ahead.

6. Charter Hall Social Infrastructure REIT (ASX: CQE)

Charter Hall Social Infrastructure REIT shares are $2.20, down 0.5% today and down 28% in 2026. 

Over the past month, this ASX REIT has lost 7%.

Ord Minnett reiterated its buy call on Charter Hall Social Infrastructure REIT shares on 9 September.

The broker lowered its 12-month price target slightly from $3.05 to $3.

This implies 36% potential upside ahead.

The post 6 ASX REITs just hit 52-week lows. Do any brokers say buy? appeared first on The Motley Fool Australia.

Whether it's $10,000 or $110,000, stocks can generate dividends to help cover certain expenses.

That cash flow doesn't just appear out of nowhere, of course. Aussies need to invest money in assets that pay dividends.

By investing regularly, investors can build a strong portfolio.

I'm going to run through some examples of what happens when you regularly invest. For plenty of people, just the regular superannuation contributions could help reach particular portfolio value goals.

How to create $110,000 of passive income at 65 and retire

I think it's essential for investors to think long-term. By investing regularly over many years, investors can build substantial wealth.

In retirement circles, many assume 4% is a sufficient withdrawal rate. Let's assume someone is targeting $110,000 per year at a 4% yield, which means targeting a portfolio of $2.75 million.

That's a big target, but I'll show you how many Aussies can reach that goal if given long enough. In all of the below examples, I'm going to assume that the share market returns an average of 10% per year.

Imagine someone is 25, starting with $0. If they invest just $450 per month over 40 years, they would reach $2.85 million.

If someone is starting at 35 with $0, and they invest $1,250 per month over 30 years, it would become worth $2.825 million.

Starting at 45 with $0, someone could invest $3,700 per month over 20 years, it would be worth $2.81 million.

Of course, there's a million different scenarios we could play out, but those three above situations show how investors can build towards approximately $2.75 million.

Numerous investment opportunities for dividends

There are a number of ways investors can get to $2.75 million and retire.

We could invest in the best options for long-term growth, then switch to passive income ideas. Quality ASX growth shares and exchange-traded funds (ETFs) could be strong options for wealth creation.

I think investment ideas like Vanguard MSCI Index International Shares ETF (ASX: VGS) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) are excellent long-term compounders.

After that I'd look at compelling ASX dividend share options.

Diversified listed investment companies (LICs) are compelling ideas such as Argo Investments Ltd (ASX: ARG), Australian United Investment Company Ltd (ASX: AUI), L1 Long Short Fund Ltd (ASX: LSF) and WCM Global Growth Ltd (ASX: WQG) are all compelling options for passive income.

I'd also be very willing to invest in cheap real estate investment trusts (REITs) offering large distribution yields, such as Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Charter Hall Long WALE REIT (ASX: CLW) and Rural Funds Group (ASX: RFF).

I think diversification during retirement is an important factor to protect capital over the long-term.

The post How much do I need to retire on $110,000 a year at 65? appeared first on The Motley Fool Australia.

I'm always on the lookout for potential buys that could mean strong returns.

Sometimes that means investing in businesses that consistently grow earnings year after year. But there can also be excellent cyclical opportunities when we buy at the weaker point of the cycle.

High interest rates are a headwind for some areas of the ASX share market, and I think that opens up an opportunity to buy during a temporary dip. Hopefully, interest rates will start coming down again at some point, and that could lead to a significant turnaround of investor confidence.

I'm going to highlight three areas that now look significantly undervalued.

Real estate investment trusts

A lot of real estate investment trusts (REITs) now trade at significant discounts to their underlying net asset value (NAV) or net tangible asset (NTA).

I love being able to buy assets for less than they're worth, and I think, on a long-term basis, that the current unit prices are trading too cheaply.

With how taxes have changed for investing in residential property, I think there could be stronger investor demand for commercial property, which could be supportive for REIT unit prices in the medium term.

I don't necessarily think that every single REIT is a buy, but I'd focus on the ones with positive long-term outlooks and rising rental income.

I think industrial properties and farmland are two areas with promising outlooks. That's why I currently really like Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Charter Hall Long WALE REIT (ASX: CLW) and Rural Funds Group (ASX: RFF).

Each of those four ASX shares has declined recently, but they're offering strong distribution yields, making them particularly appealing today.

ASX retail shares

The high cost of living and higher interest rates are likely to be a headwind for retail spending, particularly for discretionary retailers.

Retail spending is notoriously cyclical, and it can lead to volatile businesses during an economic cycle.

Even if consumers do reduce spending somewhat, I don't think the current prices reflect the long-term prospects of the retail businesses, largely just the shorter-term pain.

I'd look at names like JB Hi-Fi Ltd (ASX: JBH), Nick Scali Ltd (ASX: NCK), Universal Store Holdings Ltd (ASX: UNI), Lovisa Holdings Ltd (ASX: LOV), Temple & Webster Group Ltd (ASX: TPW), and Wesfarmers Ltd (ASX: WES).

I think they could be great opportunities to buy today for the longer term.

ASX defensive shares

Higher interest rates can make defensive businesses look less appealing because investors can get a solid return from safe investments like savings accounts, term deposits, and quality bonds.

I think ASX defensive shares could be a great investment amid higher interest rates, and lower rates in the future could make the current valuations very attractive.

After recent falls, I think names like Propel Funeral Partners Ltd (ASX: PFP), Transurban Group (ASX: TCL), Telstra Group Ltd (ASX: TLS), Medibank Private Ltd (ASX: MPL), and Sonic Healthcare Ltd (ASX: SHL) look appealing.

These aren't the only ASX shares on my watchlist after the RBA interest rate rise, but they're among my favourite ideas today.

The post Where I'd invest in ASX shares after the recent RBA rate rise appeared first on The Motley Fool Australia.

We can't control share prices, but we can control when we invest. When valuations are hitting, or close to, 52-week lows, I think there's a good chance to pick up a bargain.   

I think the two stocks below are excellent opportunities today.

Charter Hall Long WALE REIT (ASX: CLW)

The first business I want to highlight is a real estate investment trust (REIT) that's invested across a range of commercial properties in different sectors.

It provides exposure to industrial and logistics, data centres, social infrastructure, offices, hotels, service stations, and retail.

The prospect of even higher interest rates is acting as a headwind on the unit prices of REITs like Charter Hall Long WALE REIT. Over the past year, the Charter Hall Long WALE REIT unit price has dropped by 27%, making it much cheaper.

The business is generating almost as much rental income as possible from its portfolio. Its occupancy rate was 99.9% at the end of FY26, with 99% leased to reliable blue-chip tenants. Pleasingly, it has a weighted average lease expiry (WALE) of around nine years, which means a lot of rental income has already been locked in for the years ahead.  

It's a lot cheaper, and it now looks very good value compared to its underlying balance sheet. It reported net tangible assets (NTA) of $4.71 as at June 2026, so it's trading at an appealing 31% discount to that NTA.

One of the main reasons why I think it's an obvious cheap ASX share pick is that it's projected to pay an annual distribution of 25.5 cents per security in FY27. That means it could pay a distribution yield of 7.9%! I think that's close to the best forward distribution yield investors could get from the REIT over the past decade.

Collins Foods Ltd (ASX: CKF)

Another ASX share that looks to me like it's trading far too cheaply is Collins Foods, a KFC franchisee operator with operations in Australia and Europe.

As a consumer-facing business, the company may be viewed by some investors as being exposed to a potential downturn. The Collins Foods share price has fallen by 27% over the past year, making it seem much cheaper.

But the company's financials don't seem to show any sign of a downturn.

At the start of September, the company announced a trading update for the first 17 weeks. Total company sales were up 6.6%, with 6.4% growth in Australia, 44% growth in Germany, and a 2.5% decline in the Netherlands.

Management is optimistic that initiatives in Australia and Germany can continue to deliver solid performance in those two important markets. For example, it is trialling breakfast in Gold Coast restaurants.  

With plans to continue expanding its global restaurant network, I think the prospects for Collins Foods' revenue and earnings growth look promising, so the sell-off makes this look like a very cheap ASX share to me.

Based on the projection on CMC Invest, the Collins Foods share price is now trading at under 15 times FY27's estimated earnings.

These aren't the only two cheap ASX shares out there that look really good value to me, so I'd add other stocks to my watchlist, too.

The post 2 very cheap ASX shares near 52-week lows I'd buy today appeared first on The Motley Fool Australia.

I think investors would be well served by looking at the real estate investment trust (REIT) sector for opportunities right now, given how low share prices have fallen.

There's an obvious headwind for REITs right now – higher interest rates. It's a key tactic by central banks to try to reduce inflation by hiking interest rates and trying to take some heat out of the economy.

Higher interest rates are a significant headwind for REITs because they increase borrowing costs and can hurt property valuations.

For Charter Hall Long WALE REIT, this could be the right time to pounce.

Significant diversification

Plenty of Australian investors may have a significant sum of money invested in a single property, whether that's a residential property or commercial property.

With a REIT like Charter Hall Long WALE REIT, investors can buy exposure to a portfolio of over 500 properties in a single investment, while providing great passive income.

The ASX stock is invested across numerous areas, including government buildings (like Geosciences Australia), hotels, grocery and distribution, data centres, telecommunications exchanges, service stations, banking and professional services, food manufacturing, healthcare, Bunnings properties and so on.

I like how the business can provide exposure to all of those areas with just a single investment. How good is that?

It could become even more diversified in the future, since the ASX stock has the flexibility to invest anywhere for potential returns.

Large dividend yield

Charter Hall Long WALE REIT has a very generous distribution payout ratio of 100% of rental earnings. This means investors can fully benefit from the REIT and earn a higher yield than many other investments currently offer.

Despite the headwind of higher interest rates, the ASX stock expects to maintain its distribution at 25.5 cents per security in FY27, the same as the 2026 financial year.

At the time of writing, its projected payout translates into a forward distribution yield of 7.8%, which is a huge starting yield.

Its organic rental growth could help support the distributions in the coming years. The rental income is growing either in line with inflation or at a solid fixed annual rate. During FY26, the ASX stock achieved average annual net property income growth of 3.1%.

$800 per month of passive income

The ASX stock does not pay monthly, but it does pay quarterly, which I'd describe as pleasingly frequent.

However, we should think of the monthly goal as an annual goal and then divide that by 12. The annual goal is $9,600.

As mentioned, the business expects to pay an annual distribution of 25.5 cents per security. To generate $9,600 of annual passive income, we're talking about needing 37,648 Charter Hall Long WALE REIT units.

Given it's trading at a 30% discount to its net tangible assets (NTA) of $4.71 as at 30 June 2026, this looks to me like a great time to invest.

The post I'd buy 37,648 shares of this ASX stock to aim for $800 a month of passive income appeared first on The Motley Fool Australia.

To receive a dividend, you must own the ASX share before its ex-dividend date.

We're helping you keep track of ex-dividend dates with an article every Friday.

Here's a sample of the ASX shares going ex-dividend next week.

ASX shares set to trade ex-dividend next week

Rural Funds Group (ASX: RFF)

This ASX agricultural real estate investment trust (REIT) will pay an unfranked dividend of 2.9 cents per share on 30 October.

The ex-dividend date is Tuesday, 29 September.

Centuria Industrial REIT (ASX: CIP)

This ASX REIT will pay an unfranked dividend of 4.3 cents per share on 28 October.

The ex-div date is 29 September.

Centuria Office REIT (ASX: COF)

This ASX REIT will pay an unfranked dividend of 2.2 cents per share on 28 October.

The ex-dividend date is 29 September.

Tasmea Ltd (ASX: TEA)

This ASX industrials share will pay a fully-franked dividend of 8.5 cents per share on 30 October.

The ex-div date is 29 September.

Charter Hall Social Infrastructure Ltd (ASX: CQE)

This ASX REIT will pay an unfranked dividend of 4.5 cents per share on 21 October.

The ex-dividend date is 29 September.

Charter Hall Long WALE REIT (ASX: CLW)

This ASX REIT share will pay an unfranked dividend of 6.4 cents per share on 13 November.

The ex-div date is 29 September.

Charter Hall Retail REIT (ASX: CQR)

This ASX REIT share will pay an unfranked dividend of 6.6 cents per share on 27 November.

The ex-dividend date is 29 September.

Arena REIT (ASX: ARF)

This ASX REIT will pay an unfranked dividend of 4.5 cents per share on 12 November.

The ex-div date is 29 September.

Waypoint REIT (ASX: WPR)

This ASX REIT will pay an unfranked dividend of 4.3 cents per share on 30 November.

The ex-dividend date is 29 September.

Nick Scali Ltd (ASX: NCK)

This ASX consumer discretionary share will pay a 100% franked dividend of 39 cents per share on 22 October.

The ex-div date is Wednesday, 30 September.

Sims Ltd (ASX: SGM)

This ASX materials share will pay a fully-franked dividend of 20 cents per share on 15 October.

The ex-dividend date is 30 September.

Cedar Woods Properties Ltd (ASX: CWP)

This ASX property share will pay a 100% franked dividend of 25 cents per share on 30 October.

The ex-div date is 30 September.

Vulcan Steel Ltd (ASX: VUL)

This ASX materials share will pay an 85% franked dividend of 3.8 cents per share on 15 October.

The ex-dividend date is Thursday, 1 October.

Imperial Pacific Ltd (ASX: IPC)

This ASX financial share will pay a 100% franked dividend of 8 cents per share on 16 October.

The ex-div date is 1 October.

NRW Holdings Ltd (ASX: NWH)

This ASX industrials share will pay a fully-franked dividend of 14.5 cents per share on 16 October.

The ex-dividend date is 2 October.

The post 15 ASX shares going ex-dividend next week appeared first on The Motley Fool Australia.

How we structure our investments can make a big difference to how much tax we pay. We can invest in our own name, in a company, a trust, superannuation and so on.

If investors want dividend income, then how they invest can make a big difference in how much income tax is paid.

If an Australian has no income other than dividends in their own name, they can earn $18,200 tax-free. However, a full-time working Australian may lose a fair portion of their dividend income to tax because they're in a higher tax bracket.

Superannuation is taxed at a lower rate, making it a particularly appealing structure for full-time workers.

Why I think ASX shares are the right pick for passive income

Quality ASX shares can offer a pleasing mix of a strong dividend yield, a rising payout over time, and, hopefully, capital growth.

With strong earnings, ASX shares can deliver a generous dividend payout ratio. Australian companies can provide Australian tax residents with the added benefit of franking credits, a refund of the company tax paid to ensure the dividend is taxed at the investor's relevant tax rate.

There are many dividend-paying options on the ASX, such as blue-chip companies Wesfarmers Ltd (ASX: WES) and Telstra Group Ltd (ASX: TLS).

There are real estate investment trusts (REITs) such as Centuria Industrial REIT (ASX: CIP), Rural Funds Group (ASX: RFF) and Charter Hall Long WALE REIT (ASX: CLW). REITs don't generally generate franking credits because they are trusts not companies.

Investors can also choose investment companies such as Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Australian United Investment Company Ltd (ASX: AUI), Argo Investments Ltd (ASX: ARG), L1 Capital Long Short Fund (ASX: LSF) and MFF Capital Investments Ltd (ASX: MFF).

Depending on the superannuation fund, investors may be able to choose specific ASX share investments for annual passive income. SMSFs obviously have a lot of investment flexibility.

How superannuation can generate $95,000 of annual passive income

An investor would need a very sizeable superannuation balance to generate that much income.

The required portfolio size depends on the portfolio's dividend yield.

For example, if the dividend yield was 10% then the portfolio would need to be $950,000. But, I don't think it'd be realistic or sustainable to have a portfolio yield that high.

A 1% yield would need a $9.5 million portfolio. But, if we're aiming for dividends, that yield would be too low, in my view.

I'd aim for the portfolio yield to be somewhere in the middle, at say 4% to 6% including franking credits. At that level, an investor is looking at a portfolio size of between $1.58 million to $2.375 million.

It's a sizeable level required, but with regular investing and compounding, investors can reach those balances, or close to it.

The post How much is needed in superannuation to target a $95,000 annual passive income? appeared first on The Motley Fool Australia.

That could make a huge difference to your lifestyle, particularly if you are approaching retirement or hoping to work fewer hours.

And while building a portfolio capable of producing this much income will take time, ASX shares could help you get there.

Here's how it could be done.

Start by building wealth

The first thing to understand is that a $50,000 passive income requires a substantial investment portfolio.

If the goal is to generate this income from dividends with an average dividend yield of 5%, you would need approximately $1 million invested.

That might sound intimidating, but nobody needs to start with $1 million.

In fact, the early years should probably be focused on growing the portfolio rather than generating income.

This could mean investing in quality ASX growth shares such as Goodman Group (ASX: GMG), ResMed Inc (ASX: RMD), and Xero Ltd (ASX: XRO).

Blue chip shares and exchange traded funds (ETFs) could also help build wealth over time.

The aim would be to own investments capable of increasing in value over many years, while reinvesting any dividends received.

Let compounding do its work

Regular investing can make a significant difference to the journey.

For example, investing $500 a month and achieving an average annual return of 10% could grow a portfolio to approximately $1 million in 30 years.

Increase that to $1,000 a month and the same target could be reached in around 23 years.

These returns are not guaranteed, and actual returns will vary from year to year, but they demonstrate how powerful regular investing and compounding can be.

Over time, an increasing portion of the portfolio's growth can come from investment returns rather than new contributions.

Turn the portfolio into an income generator

Once the portfolio approaches $1 million, investors could start shifting their focus towards ASX dividend shares.

That could include infrastructure companies such as APA Group (ASX: APA) and Transurban Group (ASX: TCL), which own assets capable of generating cash flow over long periods.

Property investments such as HomeCo Daily Needs REIT (ASX: HDN) and Charter Hall Long WALE REIT (ASX: CLW) could provide another source of income.

Established businesses such as Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) could also have a place in the portfolio.

And for investors who would rather not select every dividend share themselves, an income-focused ETF such as the Vanguard Australian Shares High Yield ETF (ASX: VHY) could be worth considering.

Final word

Overall, I think this demonstrates that the share market can be a great place to generate a passive income.

Investors just need a combination of patience, capital, and good investments. The rest will happen in time.

The post How to build a $50,000 passive income from ASX shares appeared first on The Motley Fool Australia.