How much you would need to invest to earn $10,000 a year in dividends

So you want to build a portfolio that pays you regular dividend income? We take a look at how much capital you need to earn $5,000, $10,000 or $20,000 a year.

While many Aussies invest in the sharemarket for capital growth there is also a large number who want their investment in shares to give them a regular income in the form of dividends. The question is – how much money do you need to have invested to achieve that?

We asked the Canstar research team to do some number crunching to help give you an idea. For this hypothetical scenario, we have assumed that you would have invested in the top five dividend-paying investments on the ASX. You can see the top five in the table below – with gross dividend yields ranging from 10.3% to 15.12%. AGL Energy (AGL) and Harvey Norman (HVN) both also paid special dividends in the past year, but these were not included in the dividend yields for this scenario.

Interestingly, an exchange-traded fund (ETF) is in second spot. The Vanguard International Fixed Interest Index (Hedged) ETF (ASX: VIF) had a dividend yield of 15.07% over the 12 months to 15 June, 2021.

Top 5 ASX Investments by Gross Dividend Yield

Code Name Price Dividend Yield
Net Gross
FMG Fortescue Metals Group Ltd $23.33 10.59% 15.12%
VIF Vanguard International Fixed Interest INDEX (Hedged) ETF $44.50 15.07% 15.07%
NCK Nick Scali Ltd $10.44 8.38% 11.97%
AGL AGL Energy Ltd $9.36 8.76% 10.63%
HVN Harvey Norman Holdings Ltd $5.27 7.21% 10.30%

Source: As at market close on 15 June 2021. Based on the Market Index Dividend Scan, with special dividends excluded. Dividend Yield is the annual dividend per share (last 12 months) presented as a percentage of the share price.

After identifying the top five dividend-paying investments on the ASX, the team then did the calculations to show if someone had been invested in these top five dividend-paying stocks over the past year, the lowest total amount invested that was needed in order to earn a certain annual dividend income. This is based on the five investments each accounting for 20% of the portfolio.

As you can see from the table below, to have earned an annual dividend income of $10,000 you would have needed a total of $79,255 invested. Of course, it’s important to remember that past performance is no guarantee of future returns, so this scenario is meant to give you a rough idea of how much you would have needed invested at that time to achieve a certain level of income.

Annual Dividend Income Total Investment Amount*
$5,000 $39,637
$10,000 $79,255
$20,000 $158,492

Source: As at market close on 15 June 2021. *Based on a target of 20% invested in each of the 5 top dividend-paying equities on the ASX. Total required investment is rounded up to the nearest whole number.


Feet with arrow looking forward
Image source: ben bryant/

The outlook for dividends

Share dividends took a bit of a hit in 2020. As Michael Price, Portfolio Manager for the Ausbil Active Dividend Income Fund, pointed out, all four major banks, which are among the most sought-after stocks for dividend investors, were forced to cut or suspend dividends in 2020.

Things have started to turn around and Mr Price thinks there is potential for further upside in certain sectors and stocks. “The outlook for dividends is now showing a rebound towards previous levels, which we know will be welcome news to investors in a low-income environment,” he said. “Looking forward, we expect equities to deliver attractive dividends, with yields outstripping those from alternative income sources.”

The team at Janus Henderson is also optimistic that 2021 will be a good year for dividends. The latest Janus Henderson Global Dividend Index said that Australian dividends are set to grow by 40% in 2021 and are likely to reach 85% of their pre-pandemic 2019 levels by the end of the year.

The report noted that mining companies led the recovery in the first quarter of 2021 but banks are catching up. Australian banks are likely to restore dividends to around 70% of their 2019 level with the easing of Reserve Bank limits, according to the report.

Janus Henderson also expects healthy increases from defensive retailers like Coles and Woolworths too, but predicts a number of other companies will find it harder to grow their dividends substantially – and some may pay nothing.



Main image source: Ciurea Adrian /

Compare Online Share Trading Accounts with Canstar

If you’re comparing online share trading companies, the comparison table below displays some of the companies available on Canstar’s database with links to providers’ websites. The information displayed is based on an average of six trades per month. Please note the table is sorted by Star Rating (highest to lowest), followed by provider name (alphabetical). Use Canstar’s Online Share Trading comparison selector to view a wider range of online share trading companies. Canstar may earn a fee for referrals.

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This content was reviewed by Editor-at-Large Effie Zahos as part of our fact-checking process.

Maria has been writing about personal finance for more than 20 years. Before joining Canstar she was Deputy Editor of Money magazine, a brand she worked on for 18 years. She is also the editor of Ditch the Debt and Get Rich and A Real Girl’s Guide by Effie Zahos.

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