It's my view that ASX investors who are looking to brace their portfolios against further geopolitical or economic shocks should resist the siren's song of buying energy shares, oil ETFs or other short-term bets.

Instead, those investors should consider which companies are best placed to protect their earnings bases amid the significant challenges that the world is currently throwing their way.

It's my view that consumer staples stocks are a sector that is best positioned to protect investor capital amid high levels of uncertainty. Consumer staples stocks are companies that produce or sell goods that we tend to need to buy regularly. That includes food, drinks and household essentials, as well as alcohol and tobacco. Woolworths Group Ltd (ASX: WOW), Coles Group Ltd (ASX: COL) and Endeavour Group Ltd (ASX: EDV) are all prominent examples on the ASX.

However, I think an ASX ETF is a better option than a single ASX stock in terms of protecting a portfolio against uncertainty. That's why I think the iShares Global Consumer Staples ETF (ASX: IXI) is a perfect fund for an uncertain 2026.

Why this ASX ETF is an antidote for uncertainty

As the name implies, this ASX ETF holds a basket of global consumer staples stocks. These range from food and drink producers like Coca-Cola Co, Nestle and Cadbury-owner Mondelez International and makers of household essentials like Colgate-Palmolive and Procter & Gamble to staples retailers and grocers like Walmart, Costco Wholesale and Kroger. Even our own Woolworths and Coles feature as holdings.

It's my view that these sorts of companies can ride out economic shocks and inflation better than any other sector. We all need to buy food and household essentials on a regular basis. That means that, although painful to consumers, these companies can effectively pass on higher costs without the threat of significant sales losses.

Even if consumers switch en masse from expensive branded products to cheaper home-brand options, this ASX ETF holds a mix of companies with strong brands (Procter & Gamble, Coca-Cola) and supermarket stores, mitigating this potential trend.

IXI's holdings are also spread across many different markets, also lowering geographic and currency risk to the ASX investor.

Pulling all of these factors together, and I think we have an ASX ETF that is a perfect investment for the uncertain world we find ourselves in in 2026.

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Instead, the 'States have long been the hunting ground for the world's best growth stocks. That's not surprising when we consider the calibre of long-time winners like NVIDIA, Tesla, Mastercard, Amazon, Alphabet, Netflix, and Microsoft, amongst many others.

It's true that dividends from US stocks don't come with franking credits attached. But that doesn't mean that Australian investors can't obtain a decent income from stocks across the Pacific.

Indeed, the US markets are home to some of the world's most impressive dividend growth streaks. Companies like Coca-Cola, Altria, Johnson & Johnson, Pepsico and Colgate-Palmolive have delivered an annual dividend increase every single year for at least 50 years. That's not something that many ASX share can claim.

Sure, if one buys a US-based index fund, they can expect a lot less in dividend income upfront compared to buying an ASX index fund. To illustrate, the iShares Core S&P/ASX 200 ETF (ASX: IOZ) is currently trading with a trailing dividend distribution yield of 3.42%. In contrast, the iShares S&P 500 ETF (ASX: IVV), which tracks the most popular gauge of the American markets, will only get you a trailing yield of 1.1% at current pricing.

Can US stocks deliver decent passive income?

Let's assume for a moment that these two index funds pay out the same dividend distributions over the coming 12 months as the past 12. If that's the case, an investor would need to invest just over $700,000 in the ASX index fund of they wished to receive roughly $2,000 a month in passive dividend income. But for the S&P 500 ETF, the amount required for that same level of passive income would stand at just under $2.2 million.

However, there are easier ways to get a higher yield from US stocks. Probably the easiest is by buying higher-yielding passive income stocks. Not all of the highest calibre companies on the US markets are growth beasts. Let's start with some of the dividend stars we listed above. right now, Coca Cola shares are trading with a dividend yield of 2.72%. Pepsico offers 3.51%, while Altria has a whopping 6.32% on the table.

No dividend is safe, no matter how long its streak of annual increases. But it does give us a guide that a company knows how to make consistent profits through all kinds of economic cycles.

A combination of these kinds of shares can easily help an ASX passive income investor get at least as much of a yield form the US markets as is available on the ASX, and perhaps even more.

The post How much do you need to invest in US stocks to earn a $2,000 monthly passive income? appeared first on The Motley Fool Australia.

But after these rosy 2024 gains, many ASX investors might be looking for some stable, defensive investments to ride out 2025. After all, the returns of both the Australian and American markets were well above average last year. And the markets do have a sometimes uncomfortable tendency to revert to their mean sooner or later.

With that in mind, let's discuss a pair of defensive ASX shares that I think offer investors stability as we embark upon another year on the stock market.

Two defensive ASX shares to buy for 2025 stability

Telstra Group Ltd (ASX: TLS)

First up is the leading Australian telco, Telstra. We all know Telstra (and may or may not love it), but I think this company's shares represent a solid and stable investment for 2025. The Telstra share price actually had a fairly poor 2024, treading water for most of the year.

Despite this, the company managed to report some solid earnings and substantially grew its dividend. Today, it offers a hefty (and fully franked) dividend yield of 4.42%.

Telstra is also a highly defensive company. Fixed-line internet and mobile services are essential to modern life, and as such, customers won't want to give them up even if their personal financial circumstances deteriorate. That makes this company's earnings and profits highly stable, which should lend comfort to any investor seeking a reliable investment in 2025.

iShares Global Consumer Staples ETF (ASX: IXI)

Our second defensive ASX share is not technically a share at all. Instead, it is an exchange-traded fund (ETF). This particular ETF offers investors a portfolio of global companies that are leaders in providing consumer staples goods. Consumer staples are products that we tend to need, not want. They include food, drinks, household essentials, alcohol, and tobacco.

This ETF houses around 100 of these companies, which hail from several different countries. You'll find some familiar names in the current portfolio, including Coca-Cola, Colgate-Palmolive, Costco, Kraft Heinz and Nestle.

The inherent nature of these products makes, at least in my view, the companies that produce them very stable investments.

After all, we all still need to eat, drink and run our households regardless of how the economy or stock market is doing. I won this ETF in my personal portfolio as a sleep-well investment, and I think it can lend stability as an ASX defensive share to any portfolio in 2025.

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Many investors love the thrill of finding the next big stocks or building their own stock portfolios from scratch. But for others, a hands-off, passive approach is preferable.

For the latter, index funds are arguably a great choice. An index fund allows investors to invest in hundreds of individual shares, all in one easy ticker code. This provides instant diversification, as well as delivering what could be considered the 'average' return of a market over a long period of time.

If you are disciplined enough, and have enough cash to invest, you can even turn a $100 per week investment into a nest egg worth up to $1 million using these index funds.

Let's discuss how, using two examples.

Building wealth with ASX index funds

The first is the most popular index fund on the ASX – the Vanguard Australian Shares Index ETF (ASX: VAS).

This ASX index fund represents an investment in the largest 300 stocks on the Australian share market. That includes everything from Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW) to JB Hi-Fi Ltd (ASX: JBH), Harvey Norman Holdings Ltd (ASX: HVN) and Ampol Ltd (ASX: ALD).

The second is the iShares S&P 500 ETF (ASX: IVV). This index fund doesn't track ASX shares but instead allows ASX investors to hold the largest 500 companies listed on the American stock markets. In this fund, you'll find names like Apple, Coca-Cola, Microsoft and Colgate-Palmolive.

As of 30 September, the Vanguard Australian Shares ETF has returned an average of 8.89% per annum over the past ten years. That includes returns from both price growth and dividends.

Over the same period, the iShares S&P 500 ETF has returned an average of 15.8% per annum.

Now, let's assume these rates of return will hold going forward (which is by no means guaranteed, of course). For someone who begins investing $100 a week at age 20, reinvests all dividends like clockwork, and continues to invest every single week, rain, hail or shine, it would get them to a portfolio value of $1 million by the time they are 53 (or after 33 years).

For our 20-year-old investor, that should set them up for a rather comfortable retirement.

However, if that same investor uses the iShares S&P 500 index fund and invests that same $100 a week, it would take just 22 years to get to seven figures. An early retirement might be on the cards there.

Foolish takeaway

Of course, these numbers are completely hypothetical. There's every possibility that either of these index funds doesn't deliver the same returns they have over the past decade going forward.

But what we can count on is the power of compounding, and the effectiveness of consistently investing to build wealth. Those are the powers that we must harness if we wish to succeed in passive investing.

The post These 2 simple ASX index funds could turn $100 a month into $1 million appeared first on The Motley Fool Australia.

Such a long and steady track record shows that a company is financially stable and strong enough to fork out such a large volume of cash consistently.

Over on the US markets, there are many dividend aristocrats. Some you might have heard of include Caterpillar Inc (NYSE: CAT), Exxon Mobil Corp (NYSE: XOM), and McDonald's Corp (NYSE: MCD).

What's more, is that the US markets also boast quite a few dividend kings. These fabled royals of the share market have a 50-year streak of annually raising their dividends. This list is a lot smaller but includes Coca-Cola Co (NYSE: KO), Colgate-Palmolive Company (NYSE: CL), and Altria Group Inc (NYSE: MO).

Does the ASX offer any dividend aristocrats?

Unfortunately, here on the ASX, we have no dividend aristocrats by the US definition. Let alone dividend kings.

But we do have a couple of ASX dividend heavyweights that come close. And they are two shares that I think any investor could comfortably buy and hold for the long term.

The first is Brickworks Limited (ASX: BKW). Brickworks is a building and construction materials company. But it also has a few other earning streams, including from its lucrative property business.

Brickworks has a strong dividend track record. It hasn't raised its dividend for 25 consecutive years, so we can't call it an official dividend aristocrat.

But what it does have is a 45-year history of not cutting its dividends. In other words, Brickworks has either maintained or increased its annual dividends every year since 1976. Definity heavyweight material.

Soul Patts: 3 years to go

The second is Washington H. Soul Pattinson and Co Ltd (ASX: SOL).

Soul Patts is the closest thing to a dividend aristocrat the ASX has. No, Soul Patts hasn't quite got to 25 years of annual dividend raises. But it has upped its annual dividend every year since 2000. That means it's only three years away from becoming the ASX's first dividend aristocrat.

Soul Patts is a rather interesting company. It functions more as a listed investment company (LIC) than a traditional ASX business, owning large chunks of other ASX shares in a massive investment portfolio.

This it runs for the benefit of its shareholders. Soul Patts' largest holdings include TPG Telecom Ltd (ASX: TPG), New Hope Corporation Limited (ASX: NHC), and Brickworks itself.

But Soul Patts also owns a large and diversified portfolio of ASX 200 shares, thanks to the acquisition of ASX LIC Milton Corporation last year. These include your typical ASX holdings like BHP Group Ltd (ASX: BHP) and Commonwealth Bank of Australia (ASX: CBA).

Both of these would-be ASX dividend aristocrats have a long history of delivering meaningful returns to their shareholders. And both boast unrivalled dividend records on the ASX, if not yet long enough to qualify for the 'dividend aristocrat' tag.

As such, Soul Pattss and Brickworks are two ASX dividend heavyweights that I would happily buy and hold until retirement and beyond.

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