The ASX bank shares like, Westpac Banking Corporation Ltd (ASX: WBC), are popular for passive-income seeking investors who want to invest in established companies.
The banking giant is the third-largest company on the Australian sharemarket, by market capitalisation, and the second-largest ASX bank stock.
Bank stocks are generally considered cyclical stocks, but major large-cap blue-chips like Westpac also fit the mold of a defensive shares. This is because it is able to remain relatively stable, even when the economy slows down.
The bank provides a broad range of consumer, business, and institutional banking and wealth management services like mortgages, loans, and savings accounts.
Australians need these services on a daily basis regardless of what state the economy is in.
And as we've seen this year, investors often rotate into defensive assets in volatile markets. This means Westpac is able to benefit from instability elsewhere in the index.
Westpac's scale and defensive qualities means the bank is also able to pay regular passive income to its shareholders.
But what if you wanted to generate $2,000 of passive income from Westpac shares every single month? What exactly would that look like?
Let's find out.
What passive income does Westpac pay its shareholders?
Westpac has a long history of paying dividends to shareholders which dates back to 2003. The bank typically pays regular fully-franked dividends in June and December every year.
It most recently paid an interim dividend of 77 cents per share to investors in June.
The bank is forecast to pay an annual fully-franked dividend of $1.54 per share in FY26. For FY27 it is forecast to pay $1.55 per share. This implies a forward dividend yield of 3.9% in FY26, and 4% in FY27 at the time of writing.
How many Westpac shares do I need to buy to generate $2,000 per month in passive income?
Assuming Westpac pays the $1.54 dividend in FY26 (which ends on the 30th of September), investors would need to buy around 15,584 shares. This would generate a $24,000 per year passive income, the equivalent of $2,000 per month.
To earn the same amount in FY27, assuming the bank pays the forecasted $1.55 per share dividend, investors would need to buy around 15,483 shares.
How much would that cost?
At the time of writing, Westpac shares are changing hands for $38.83 a piece.
In order to buy the 15,584 shares needed for a $2,000 per month (or $24,000 per year) passive income in FY26, you would need to invest around $605,126.
For the same earnings in FY27, you'd need to invest around $601,204.
That's certainly not a small amount of money, and it's not possible for many investors. But it could be worth it in the long run.
Not only could you earn a nice passive income every six months, there is potential for capital returns too.
And remember, you don't need to invest the entire amount in one go. Let compounding do some of the work for you.
The post How many Westpac shares do I need to buy for $2,000 per month in passive income? appeared first on The Motley Fool Australia.
Motley Fool contributor Samantha Menzies 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.
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