Whether your retirement is decades away or just a few short years, ASX passive income stocks can help boost your lifestyle after you hang up your working hat.
While it's never too late to start, getting an early jump on investing in quality ASX dividend shares can allow you to take advantage of the magic of compounding.
Depending on your timing, share selection, and the amount you choose to invest, ASX passive income stocks have the potential to help you retire in true style.
We'll look at three such companies below.
Just do keep in mind that a properly diversified income portfolio will contain more than just three stocks. There's no magic number, but 10 is a good target, ideally operating in various sectors and geographic locations. That will reduce the risk your entire portfolio takes if one company or sector comes under pressure.
Also, remember that the yields you generally see quoted are trailing yields. Future yields may be higher or lower depending on a range of company-specific and macroeconomic factors.
However, I believe all three ASX passive income stocks below should continue to deliver reliable dividend streams over the coming years.
The first company I'd buy for dividends to help improve my retirement lifestyle is S&P/ASX 300 Index (ASX: XKO) retailer Adairs Ltd (ASX: ADH). The company's store brands incorporate Adairs, Focus on Furniture, and online shop Mocka.
Over the past year Adairs has paid out (or shortly will pay out) 13.5 cents a share in fully franked dividends.
At Friday's closing price of $2.14, Adairs is trading on a fully franked dividend yield of 6.3%. And those franking credits could see you hold onto a lot more of that income at tax time, particularly during retirement.
The next ASX passive income share I'd target is Elders Ltd (ASX: ELD).
The S&P/ASX 200 Index (ASX: XJO) agribusiness closed Friday trading for $7.01 a share. With Elders having paid out 36 cents a share in partly franked dividends over the full year, the stock trades on a partly franked dividend yield of 5.1%.
Which brings us to our third ASX passive income share, WAM Capital Limited (ASX: WAM).
Shares in the asset manager closed Friday changing hands for $1.63 apiece.
Over the last 12 months, WAM Capital has paid (or shortly will) 15.6 cents a share in partly franked dividends, giving the stock a partly franked dividend yield of 9.5%.
And there's still time to grab the 7.8 cents per share interim dividend, franked at 60%. WAM Capital trades ex-dividend on 16 April, meaning you'll need to own shares at market close on 15 April to bank that passive income payout.
Atop those regular dividends, of course, we'll be hoping to see the share prices of these stocks gain over time as well.
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