© Provided by The Motley Fool
A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
© Provided by The Motley Fool
A woman sits at her computer with her hand to her mouth and a contemplative smile on her face as she reads about the performance of Allkem shares on her computer
How would you feel if you received $500 each month for doing nothing?
That’s $6,000 each year of passive income, which is pretty handy pocket money. That would easily pay for a nice family holiday.
So what’s the size of investment in ASX dividend shares you would need to achieve this level of financial freedom?
Let’s work it out.
How many BHP shares will I need?
Thanks to favourable tax laws, Australian investors are lucky enough to have a wide range of dividend stocks to choose from on the ASX.
But experts warn some stocks with extremely high dividend yields can be value traps.Â
That’s because the yield could have increased due to a falling share price, which in turn could indicate flagging fortunes for the underlying business.
So for the purposes of our calculations, let’s take a large, reliable S&P/ASX 200 Index (ASX: XJO) company such as BHP Group Ltd (ASX: BHP) as an example.
According to The Motley Fool stock profile, BHP shareholders currently enjoy an 8.4% dividend yield.
That means that in order to reap $6,000 each year, you currently need $71,428.57 worth of the mining giant’s shares.
If you include franking credits, depending on your personal circumstances, the investment you need is even less than that.
Not bad at all.
How much do I need to save?
But if you don’t have that large a sum to buy shares with right now, you’ll need to start saving.
Are you able to save $2,000 each month to buy BHP shares?
According to Canstar, that’s less than half the amount of the average monthly mortgage repayment in NSW.
If you can manage that, you will have bought enough BHP shares within three years to achieve your goal of grabbing $500 per month of glorious dividends.Â
Plus the bonus of earning a passive income from ASX shares is that there is the potential for capital growth.
Although share prices can head down, over the long term you stand a reasonable chance that the $71,428.57 of BHP shares will increase in value.
The post How much to invest in ASX shares to get $500 in dividends every month appeared first on The Motley Fool Australia.
Should you invest $1,000 in Bhp Group right now?
Before you consider Bhp Group, you’ll want to hear this.
Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now… and Bhp Group wasn’t one of them.
The online investing service heâs run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.
*Returns as of April 3 2023
More reading
Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.