Why I just bought this 5.2%-yielding ASX dividend stock and plan to buy even more

This business is one of my favourites for dividends and total returns.

Tristan Harrison

Author Bio Tristan Harrison has a decade of experience as an ASX share investment writer and was previously a business, tax and audit accountant for seven years. Tristan has contributed to The Motley Fool since October 2016. He has an advanced diploma from the Association of Accounting Technicians and is currently enrolled in the Chartered Institute Management Accountant (CIMA) program. Tristan's goal is to help Australians learn about great ASX shares that can help grow their portfolio, wealth and dividends over the long-term. Areas of Expertise ASX dividend shares and passive income strategies ASX growth shares and ETFs Business and company financial analysis Franking credits and personal tax topics Personal finance Education Advanced diploma from the Association of Accounting Technicians Enrolled in the Chartered Institute Management Accountant (CIMA) program Social Media X/Twitter Favorite Investment Quote "Live within your income and save so that you can invest." — Charlie Munger

Published July 17, 2025 6:00 am AEST

A significant portion of my portfolio is aimed at investments that I think can deliver a combination of dividends and capital growth. That's why I like ASX dividend stocks, because of their ability to deliver good passive income and increase their underlying value.

A good portion of my portfolio is focused on growth, but I like the additional cash flow that is provided to my personal finances. I can use that money for spending, investing in new ASX shares or to build my savings.

The ASX dividend stock that I recently invested in was MFF Capital Investments Ltd (ASX: MFF). Previously, it was best known as a listed investment company (LIC). However, it now has an operational side after acquiring the funds management business Montaka.

There are a few reasons why I invested in the ASX dividend stock, which I'll outline below.

Young male investor smiling looking at laptop as the share price of ASX ETF CRYP goes higher today — Image source: Getty Images

Why I'm a big fan of this ASX dividend stock

The business ticks all of the boxes I'm looking for in a passive income ASX share.

Firstly, it offers a solid dividend yield. The company's board guided for MFF Capital to pay an annual dividend per share for FY25 of 16 cents. At the time I invested, this translated into a grossed-up dividend yield of 5.2%, including franking credits.

Second, I really like the consistent growth of the ASX dividend stock's passive income. While payouts aren't guaranteed, it's the board of directors that decide on the size of the dividend. It's helpful the business has a large accounting profit reserve balance to pay future dividends. The annual ordinary payout has increased each year since 2018.

Third, I like how the company provides diversification because it has a portfolio of high-quality international shares that could deliver pleasing compounding of earnings over the coming years because of their global growth runway and powerful market positions. There are names like Alphabet, Mastercard, Visa and Amazon in the portfolio.

Fourth, I thought it was trading at an attractive discount. At the start of the week, it announced its weekly pre-tax net tangible assets (NTA) was $4.98 on 11 July 2025, so I invested at a discount of around 12%. I think a discount of 10% or more is a good time to invest. Overall, there's a lot to like about this ASX dividend stock in my view, and I'm planning to buy more in the coming months and years.

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