Unsurprisingly, millionaires around the world have several streams of passive income. This is because they believe that more passive income sources an individual has, the closer he/she will reach goal of financial freedom. In the absence of passive income, an investor has to rely on active income, which obviously can evaporate in the crisis-like situation or during economic slowdown. There are numerous opportunities to think beyond one single income stream. From making investments in stocks and bonds to monetizing the content online, passive income has a potential to do wonders and it can set an investor apart from the masses. Over the long-term, it can result in elevating an investor into millionaire status.
Australians tend to make investment in the managed funds, freestanding property, etc. for the passive income. However, some investors remain unaware about the investment in shares. Given the current economic environment, this can be an ideal best time to invest in best passive income Australian shares. This holds true because Australian market, or Asia-Pacific region, continues to attract investors’ attention.
Primarily supported by surge in commodity stocks as S&P/ASX 200 index surged by 0.8% to 7,489.1. This marked its highest close since February 9. This increase results was supported by US markets and while crucial U.S. data.
With this in mind, we will now have a look at best passive income Australian shares to buy now.
1. Accent Group Ltd
The company is the footwear-focused retailer dealing in the retail brands including The Athlete’s Foot, HypeDC, Platypus, and Style Runner.
It has released its FY23 results, with total sales coming at $1.57 billion, exhibiting a rise of 24% on the prior year and Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) of $298.2 million, up by 39.6% year-over-year. Net Profit After Tax (NPAT) of the company came $88.7 million as compared to $31.5 million in FY22.
Continued focus on customers, new product launches, and return on investment collectively supported the company in delivering strong result. It continues its journey of higher profit and shareholder returns which led to profit growth achieved in 5 of the previous 6 financial years.
Gross margin of the company came in at ~55.2%, exhibiting a rise of 100 basis points. Even though it saw impacts of a lower AUD, magnitude of promotional environment in 2H and clearance of discontinued brands, ongoing strategy to support gross margin rate with help of distributed and owned vertical brands has been improving underlying gross margin. It continues to have valuable portfolio of growth opportunities throughout core banners and new businesses.
For first 19 weeks of FY24, its total Group owned sales (including wholesale sales) were flat in comparison to last year. Total owned retail sales saw an increase of 2.1%. Like for Like sales were down by 2.0%. FY24 gross margin % was broadly in line with same period of the last year. The company focuses on cost of doing business (CODB) efficiency. As a result of inflationary pressures on costs and weaker like for like sales, the company’s CODB % to sales till the end of week 19 came in higher as compared to prior year.
Its in-stock position and sales and operational plans continue to be well set as it experiences the most important trading months of year.
2. Pinnacle Investment Management Group
Pinnacle Investment Management Group (ASX: PNI) is engaged in the business of providing specialist investment managers having strong global distribution, fund infrastructure and support services to allow them to focus on providing investment excellence to clients.
Net profit after tax attributable to shareholders of the company came in at $76.5 million, exhibiting a slight increase from $76.4 million in prior financial year. Diluted earnings per share (EPS) came 39.0 cents, which exhibits a fall of 1% from 39.5 cents in FY22. Pinnacle’s share of affiliates’ NPAT came $67.4 million, a decline of 11% from $75.7 million in FY22.
Performance fees earned by Pinnacle Affiliates, post-tax, made the contribution of $14.7 million of Pinnacle’s NPAT in FY23. Net inflows for FY23 came to the tune of $1.5 billion ($3.1 billion in 6 months ended 30 June 2023 (2H23), which includes $0.6 billion retail ($0.3 billion in 2H23). Cash and principal investments came at $187.2 million as at 30th June 2023. Facility from CBA of $120.0 million was fully drawn down. FUM of 15 PNI Affiliates as at 30 June 2023 came $91.9 billion.
Throughout FY23, the global stock market continued to see economic consequences of geopolitical tensions, increased global inflation and central banks raising their interest rates at a quicker pace. As a result of this, net inflows of the company came in considerably lower than expectations and this impacted its financial result.
The company and its affiliates continue to focus on growth initiatives, recognizing that such initiatives might impact profits in short-term. Having said that, it aims to deliver strong growth opportunities in medium-term.
3. Harvey Norman Holdings Limited
The company has been categorised as an Australian multinational retailer of furniture, bedding, computers, communications along with other consumer electrical products.
It saw a substantial 40% growth in its net assets since start of pandemic, increasing to $4.47 billion as at 30 June 2023. Balance sheet of the company remained strong, with total assets coming at $7.67 billion, anchored by $4billion property portfolio. Prudent financial management led to significant liquidity and low net debt to equity ratio of 13.85%. This gives the company capacity to have additional liquidity as and when needed.
Conclusion
While above are some of the best passive income Australian shares to buy now, there are several other stocks in the Australian equity market which can provide extra stream of income. Investing in best passive income Australian shares will not only provide diversification to an investor’s portfolio, but will also balance out the losses seen in other growth or mid-cap stocks.
As investors, we all are aware of the fact that even in difficult economic times when equity market becomes volatile, it is still possible to have some passive income. One can have some passive income by investing in strong dividend-paying companies.
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