Whilst I'd like to think my retirement capacity may be coming sooner than later, the reality is that having the option not to work is still probably a few decades away for this writer. Even so, I'm investing in ASX stocks today in order to facilitate the earliest possible realisation of financial freedom.
With that in mind, there's one ASX stock that I already own in my pre-retirement portfolio that I'm eyeing for a potential top-up this May. This ASX stock in question is the listed investment company (LIC) Plato Income Maximiser (ASX: PL8).
Like most LICs, Plato Income Maximiser functions more like a managed fund than a traditional ASX stock. It manages a portfolio of underlying assets on behalf of its shareholders.
In Plato's case, these assets are purchased with the primary aim of maximising franked dividend income for shareholders. Just like it tells us on the tin.
As such, investors won't be too surprised to see ASX stocks like BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), National Australia Bank Ltd (ASX: NAB) and Woodside Energy Group Ltd (ASX: WDS) amongst the current top ASX stocks within Plato's portfolio.
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Why would I buy more of this ASX 200 stock?
Unlike the vast majority of ASX dividend stocks, Plato Maximiser doles out not biannual or quarterly dividends, but monthly payments. Yep, shareholders get a dividend paycheque 12 times a year.
The company's last 12 payments all amounted to 0.55 cents per share, fully franked. The current Plato share price of $1.20 gives the company a trailing annual dividend yield of 5.96%. Grossed up with the company's full franking credits, we get a yield of 8.51%.
But a high dividend yield means nothing if the company can't deliver, at the bare minimum, share price stability and, at best, some additional capital growth. Just ask income investors who've bought WAM Capital Ltd (ASX: WAM) shares about that.
Fortunately, in Plato's case, shareholders have enjoyed additional returns outside dividend payouts. According to Plato, its investment portfolio has generated a total return of 10.1% per annum (as of 31 March) since its inception in 2017.
That's in addition to an average return of 11.5% over the past three years, and 14.9% over the 12 months to 31 March. Those returns take into account management fees, as well as returns from those full franking credits.
Taking all of this data into account, I think Plato Income Maximiser is a high-quality ASX stock and, as such, is a foundational holding in my pre-retirement portfolio. The monthly dividends are a great source of passive income that I can reinvest into additional dividend shares, which will hopefully result in an early retirement one day.
