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How I would build a $100,000 ASX dividend portfolio

Sebastian Bowen
Woman holding up wads of cash

Dividend income is one of the best by-products of investing in ASX shares. Receiving regular cheques in the mail just for owning stocks is a beautiful thing. But some shares pay more out to shareholders than others.

Here’s how I would build a $100,000 portfolio that would throw off mountains of cash and franking credits every year.

Commonwealth Bank of Australia (ASX: CBA) – $30,000

CBA is the only ASX bank not to have cut its income payments to shareholders this year. Whilst the other banks have trimmed their dividend, or reduced the franking credits on shares, CommBank has stayed true – to the delight of its shareholders, I’m sure. On current prices, CBA shares are offering a yield of 5.45%, which grosses up to 7.79% when you throw in franking. For this reason, I think CommBank is a great income buy today.

Sydney Airport Holdings Pty Ltd (ASX: SYD) – $30,000

Sydney Airport is known as a phenomenally defensive company – and for good reason. Owning the only international airport in Sydney comes with a lot of benefits – namely, tourists and Aussies have little other choice if they want to enter or leave the state by plane.

This virtual monopoly gives Sydney Airport a powerful moat and earnings base, from which it is able to pay a solid dividend. Today, this dividend will net you a yield of 4.39%, which is not a bad bag, considering our low-interest rates.

Medibank Private Ltd (ASX: MPL) – $40,000

Medibank is the largest health insurance provider in the country and is highly profitable – paying out a 4.1% dividend (5.86% grossed-up) on current prices. The company has also increased this dividend every year since its listing in 2015, making it a great dividend growth stock to hold for the long-term, in my view.

Medibank had a tough week this week, falling nearly 5% after warning its claims were coming in higher than expected. Still, I think this is a temporary problem and with the assistance from the government that this sector receives, not a reason to shun this company.

Foolish takeaway

I think these 3 dividend-paying shares would be a great foundation on which to build an income portfolio today. I think Medibank shares look like the best buy today, but CBA shares aren’t looking too expensive either, so take your pick!

The post How I would build a $100,000 ASX dividend portfolio appeared first on Motley Fool Australia.

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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019