The ASX dividend stock MFF Capital Investments Ltd (ASX: MFF) is one of my favourite ideas right now. I think this investment business could be a great pick for the long-term.
It spent most of its life as a listed investment company (LIC), but recently added an operational element to its business after acquiring the funds management business Montaka.
Pleasingly, this acquisition includes additional investment professionals to MFF to help bring ideas to the portfolio, the two key investment professionals being Andrew Macken and Chris Demasi. MFF will also benefit from the rising funds under management (FUM) of Montaka, though it's immaterial to the overall business at this stage.
Having said that, let's get into why the ASX dividend stock looks so appealing right now and why I'd be happy to add more to my holding (which I have been doing recently).
Appealing dividends
The business has grown its annual ordinary dividend every year since 2018 and I think it can continue to grow. As a company, the board of directors can decide what level of payment to make. MFF has built up a significant profit reserve, allowing the business to provide payout consistency.
It's expecting to grow its FY25 annual dividend to 16 cents per share. At the current MFF share price, that payout would reflect a grossed-up dividend yield of 5.6%, including franking credits.
While that's not a huge yield, I think it strikes the right balance between a good upfront yield and leaving enough capital within the business so it can continue delivering sustainable growth through the portfolio's investment returns.
Great holdings
MFF's main value is in its share holdings of strong, global businesses.
These companies have incredibly strong positions in the economy, great brands, strong balance sheets and impressive profit margins. I think they're likely to continue performing in the long-term as they grow earnings and justify higher market capitalisations thanks to their global growth ambitions.
The ASX dividend stock's biggest holdings are currently: Alphabet, Amazon, Mastercard, Visa, Bank of America, American Express, Meta Platforms, Home Depot and Microsoft.
If the share prices of the above businesses fall further amid the trade war, I think MFF shares would be more appealing to gain access to these businesses at a cheaper price.
Pleasing asset discount
The business regularly tells investors what its underlying value is, as measured by the net tangible assets (NTA) per share.
At the time of writing, the company's latest weekly update was for 17 April 2025, when its pre-tax NTA was $4.40. At the current MFF share price, it's trading at a 7% discount to this. However, the S&P 500 (INDEXSP: .INX) – which I view as a decent proxy for the MFF portfolio – has risen 4% since 17 April 2025, so I think the MFF share price could be trading at a larger discount to the ASX dividend stock's underlying value than 7%.
