With the end of the financial year approaching, many investors will be looking forward to a little cash injection from their tax return. Rather than spending it on a fancy dinner, new pool table, or a second hand boat, here are some strong ASX dividend shares to consider.
These options have a reliable history of dividend repayments, and are what I consider "set and forget" dividend shares.
The big four banks have historically provided consistent dividends for investors. However the cream of the crop are Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ).
Westpac has traditionally provided fully franked dividends and at the time of writing, has a dividend yield of 4.6%.
ANZ currently has a dividend yield of roughly 5.6%.
Looking outside the big four, Bank of Queensland Ltd (ASX: BOQ) also has an attractive yield of 4.4%.
Based on these yields, an investment of $3,000 into any of these blue-chip dividend shares would bring an annual passive cash flow between $132 and $168.
A $5,000 investment would bring between $220 and $280 in dividend payments.
Another option for investors looking for a "set and forget" dividend investment is an ASX ETF.
These pooled investment vehicles can be designed to maximise dividend returns.
One that fits this description is Vanguard Australian Shares High Yield ETF (ASX: VHY).
This fund gives exposure to companies listed on the Australian Securities Exchange (ASX) that have higher forecast dividends relative to other ASX-listed companies.
Security diversification is achieved by restricting the proportion invested in any one industry to 40% of the total ETF and 10% for any one company.
At the time of writing it has a forecast equity yield grossed-up (dividend) 5.9%.
This would mean almost $300 a year in passive income for a $5,000 investment.
It has also risen 45.44% over the last 5 years, bringing strong growth alongside these dividend payments.
Generating passive income from ASX dividend shares can turn a moderate investment into a sneaky income stream.
When you consider reinvestment plans and compounding growth, even a modest investment this year from your tax return could grow to a sizeable portfolio in 5-10 years.
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