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The Australian stock market is a great place to generate passive income. That’s because many publicly traded companies share a portion of their profits with shareholders each year in the form of dividends.
For example, if you have a portfolio of ASX dividend stocks that offer a total dividend yield of 5%, investing $10,000 will give you $500 in passive income.
It’s nice to have an extra income without doing anything, but it’s clearly not a life-changing amount. It’s enough to pay for dining out and interstate flights, but it’s not exactly extra income.
But with a combination of time, regular investment, and compound interest, you can build a portfolio that generates enough passive income to retire early.
Suppose you want to retire on $50,000 a year. If the portfolio had an average dividend yield of 5%, he would need to invest $1 million to generate that level of return.
This sounds like a challenge, but history shows it is achievable.
If you start with a $15,000 investment portfolio and contribute $400 a month, you’ll grow to a $1 million level in 30 years with an average annual return of 9.6%.
While not guaranteed, this return is in line with the 30-year average return of ASX stocks. According to Fidelity.
3 ASX dividend stocks with a yield of 5% or more
If you’re lucky enough to already have a multi-million dollar portfolio, depending on your passive income needs, consider the three ASX dividend stocks rated buy listed below. I guess.
Dicker Data Co., Ltd. (ASX:DDR)
Dicker Data is a leading distributor of hardware, software, cloud and cybersecurity technologies. Morgan Stanley has outperformed its stock rating and has a price target of $10.00. As for the dividend, analysts at the firm expect a fully frank dividend of 43.8 cents in 2023 and 48.8 cents in 2024. Based on Dicker Data’s latest stock price of $8.15, that means yields of 5.4% and 6%, respectively.
Healthco Healthcare and Wellness REIT (ASX: HCW)
Another ASX dividend stock on the buy list is Helco Healthcare & Wellness REIT. Morgan’s is positive about the health and wellness-focused real estate investment trust, adding its stock rating and a $1.72 price target. The company expects a dividend of 7.6 cents per share in 2023 and 8 cents per share in 2024. Based on the current Healthco Healthcare and Wellness REIT base price of $1.39, this represents yields of 5.45% and 5.9% respectively.
Universal Store Holdings Co., Ltd. (ASX:UNI)
Finally, Goldman Sachs thinks the youth fashion retailer could be bought as a dividend stock in ASX. The company has a buy valuation and a price target of $5.05. In terms of earnings, we expect a full-flank dividend of 20 cents per share in 2023 and 24 cents per share in 2024. Based on Universal Store’s current stock price of $2.67, that means yields of 7.5% and 9%, respectively.