If you've got $1,000 to spend on an ASX dividend stock, there's one that would catch my eye right now.
This ASX dividend stock is currently going for $4.76 a share, meaning a $1,000 investment could buy 210 shares today.
This company is none other than MFF Capital Investments Ltd (ASX: MFF).
MFF Capital Investments is a listed investment company (LIC). This means that, rather than producing a good or service like most companies do, MFF invests in a portfolio of underlying assets that it manages on behalf of its shareholders.
In MFF's case, this portfolio consists mostly of American stocks. This company has been run by one of Magellan Financial Group Ltd (ASX: MFG)'s co-founders, Chris Mackay, for decades. Mackay tends to follow a Warren Buffett-like approach of buying high-quality businesses at compelling prices and just holding them for as long as possible. Many of MFF's top portfolio positions, which include Amazon, Alphabet, Mastercard, Visa, Bank of America, and American Express, have been held for many years.
This approach has been enormously successful. As of the current pricing, this ASX dividend stock is up about 85% over the past five years. That works out to be an average compounded return of 13% per annum.
But that's just share price gains. Let's talk dividends.
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An ASX dividend share with a 3.6% yield
One of MFF's most appealing attributes is its dividend policy. This ASX dividend stock has been increasing its payouts at a breakneck pace in recent years. Shareholders have enjoyed a dividend pay rise every year since 2017. Back in that year, investors enjoyed 2.5 cents per share in fully franked payouts. But by this year, that annual dividend total will rise to 17 cents per share when MFF's final dividend of 9 cents per share is paid out next month.
This means that, since 2017, MFF has increased its dividends by a rate of 27% per annum.
By my calculations, this ASX stock's dividends over the past five years add another 4.78% per annum to the company's overall performance. That means shareholders have enjoyed a total return of 16.12% per annum since September 2020.
Today, at the current price, this gives MFF Capital shares a trailing dividend yield of 3.57%.
Although MFF shares have risen substantially in value in recent years, I still think this ASX dividend share is cheap today. Why? Well, like most LICs, MFF periodically releases the net tangible assets per share. In simpler terms, that's how much its underlying investment portfolio is worth per share, which can often differ from the actual price those shares trade at. As of 29 August, MFF's shares had a NTA of $5.26 before taxes.
That's well above the current share price of $4.76.
As such, I think ASX dividend stock investors could do a lot worse than buying 210 MFF shares right now.
