2 ASX passive income ideas I'd use to generate $500 a month in 2027

There are numerous investments on the ASX that pay dividends. But, I have a few favourites that I'd describe as top passive income options.

I'd want to focus on names that have a good starting yield, reliable payouts and a high chance of long-term dividend growth.

With the above in mind, I'd say the following two stocks fit the bill if I wanted to unlock serious passive income.

Rural Funds Group (ASX: RFF)

Rural Funds is a real estate investment trust (REIT) that gives investors the ability to buy sizeable pieces of Australian farmland.

I appreciate the diversification on offer from the portfolio of farms – cattle, vineyards, almonds, macadamias and cropping.

It generates pleasing levels of rental income from its portfolio and regularly invests in its farms to increase the productivity, value and rental potential.

Rural Funds recently decided it would sell a few of its farms where it had invested in infrastructure and now it plans to recycle that capital towards opportunities that have better return potential. This move will also lower gearing (debt levels) and improve the adjusted funds from operations (AFFO – the rental profit).

Rental income is steadily growing due to contracted increases that are either fixed rises or linked to inflation.

I expect the business will pay an annual distribution of at least 11.73 cents per security in FY27, which translates into a forward distribution yield of 5.3% at the time of writing. It has maintained or increased its passive income payout every year since 2014.

Future Generation Australia Ltd (ASX: FGX)

Future Generation Australia is a listed investment company (LIC), one of the most diversified LICs on the ASX.

All of the fund managers involved work for free so that Future Generation Australia can donate 1% of its net assets each year to youth charities.

It's invested in more than a dozen ASX share-focused funds. It's invested in more than 400 ASX shares of various sizes, giving investors more exposure to growth than the broader ASX share market does.

The ASX dividend share has increased its payout each year over the past decade, which is a great track record of rewarding shareholders with larger dividends.

For 2026, it expects to pay an annual dividend per share of 7.6 cents, which translates into a grossed-up dividend yield of 8%, including franking credits.

$500 per month of passive income

Between my two above ideas, they have an average dividend yield of 6.65%.

To generate an average of $500 per month, we're talking about an annual goal of $6,000. With a dividend yield of 6.65%, an investor would need to invest around $90,200 invested across these businesses.

I'd be very happy to make that investment because of their track records of payout reliability, but they're not the only ASX stocks I'd buy for passive income.

The post 2 ASX passive income ideas I'd use to generate $500 a month in 2027 appeared first on The Motley Fool Australia.

Motley Fool contributor Tristan Harrison has positions in Future Generation Australia and Rural Funds Group. 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 positions in and has recommended Rural Funds Group. 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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