3 cheap ASX passive income shares I'd buy to target $1,000 a month
Smiling woman upside down on a swing with yellow glasses, symbolising passive income.
Welcome to the new financial year of FY25âa fresh start full of possibilities.
What adds to the excitement is the increased super contributions Australian workers will receive from their employers this year.
Are you considering adding affordable ASX shares to boost your passive income?
Explore my list of inexpensive ASX shares to enhance your passive income portfolio. If you have an extra $20,000 to invest today, these 3 ASX shares could potentially generate an additional annual passive income of $1,000.
Let's get started!
Super Retail Group Ltd (ASX: SUL)
First two companies on my list are ASX retail shares, facing challenges from weak consumer sentiment amid ongoing living cost pressures.
Super Retail Group owns and operates popular retail brands, including Supercheap Auto, Rebel, BCF, and Macpac.
According to its May trading update, like-for-like sales growth remained largely flat, with BCF seeing a 5% decline while Macpac grew by 3%. The company said that while foot traffic continues to rise, consumers are purchasing fewer items per sale.
This subdued consumer sentiment, shared by both consumers and investors, has positioned its shares attractively at just 13x its FY25 earnings estimate by S&P Capital IQ.
At the current share price, it offers a fully-franked dividend yield of 5.6% using its trailing 12 months' payments.
Analysts at Goldman Sachs believe dividends will be largely maintained next year. They project Super Retail's dividends per share to reach 73 cents in FY25, yielding 5.4% based on the current share price.
The Super Retail share price is currently $13.59.
Accent Group Ltd (ASX: AX1)
My second pick in the consumer sector is Accent Group, known for brands such as The Athlete's Foot, Platypus Shoes, Hype DC, and Skechers.
Accent Group appears more affected by declining retail consumption than Super Retail Group. In 1H FY24, its revenue grew by a modest 2.7% to $811 million, while operating profits declined by 20% to $72.4 million.
This was because of surging operating costs, driven by negative like-for-like retail sales, lower wholesale revenues, and cost inflation.
Accent Group shares are trading at 13x FY25 earnings estimates by S&P Capital IQ, which is attractive relative to its historical range of 8x to 25x.
Looking long-term, Accent Group boasts a robust portfolio of shoe brands, making it a likely destination for your next shoe purchase.
Using S&P Capital IQ estimates as a guide, analysts expect Accent Group's earnings per share to recover swiftly to 14 cents in FY25, followed by a 17% increase to 17 cents in FY26.
The Accent Group share price is currently $1.91. At this price, Accent Group offers a fully franked dividend yield of 7.33%.
BHP Group Ltd (ASX: BHP)
For investors unsure about consumer discretionary shares, BHP Group is a stable choice. This year, BHP shares have dropped 14%, largely due to decreases in copper and iron ore prices.
As my colleague Bernd highlighted, in June, iron ore prices fell 9% to US$117 per tonne, while copper prices dropped 6% to US$9,516 per tonne.
Mining shares are cyclical, so this downturn might be a good time to buy this ASX blue-chip stock.
While earnings may suffer in the next year or two, depending on the global economy and demand for commodities, over the long term, BHP has been one of the best dividend shares to invest in.
BHP shares are currently trading at a P/E ratio of 11x on FY25 earnings estimates by S&P Capital IQ.
The BHP share price is currently $43.30. At this price, BHP offers a fully franked dividend yield of 5.42%.
Should you invest $1,000 in Accent Group Limited right now?
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Motley Fool contributor Kate Lee has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Super Retail Group. The Motley Fool Australia has positions in and has recommended Super Retail Group. The Motley Fool Australia has recommended Accent Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.