As most ASX passive income investors would be aware, it's becoming harder and harder to find compelling buying opportunities amongst the most popular ASX dividend shares on our market in 2025. A galloping stock market this year has brought bounties to investors.
But with the market continuing to reset record highs this year, the dividend yields available on some of our most sought-after income stocks have continued to decline.
This has been most stark for the major ASX banks. It was once common to see several members of the big four banks offering dividend yields above 5, or even 6%. Today, Westpac Banking Corp (ASX: WBC) and National Australia Bank Ltd (ASX: NAB)'s dividend yields are both well under 5%. And Commonwealth Bank of Australia (ASX: CBA) is sitting at a historic low of under 3%.
It's a similar story with Wesfarmers Ltd (ASX: WES) and Coles Group Ltd (ASX: COL), which are currently trading at yields of under 3%.
As such, the 3.54% dividend yield that MFF Capital Investments Ltd (ASX: MFF) currently trades on is looking pretty competitive against these popular ASX passive income stocks. Particularly given it comes fully franked. But that's not the only reason this listed investment company (LIC) offers a lot of value to investors right now, at least in my view.
It takes a lot of effort to put an independent valuation on most ASX shares. Investors typically look at revenues, profits, historic price-to-earnings (P/E) ratios, and expected future earnings to come up with a ballpark figure.
But for a LIC like MFF, it's a walk in the park.
Image source: Getty Images
A passive income stock at a 10% discount?
An LIC usually operates by holding a portfolio of underlying assets, in this case stocks, that it manages on behalf of its investors.
As such, we can get a decent valuation for the company just by looking at how much its underlying portfolio is worth.
This is how MFF Capital is able to give us a net tangible assets (NTA) figure that tells us exactly what its own portfolio is worth every single week.
MFF follows a Warren Buffett-inspired strategy of buying shares of high-quality companies, typically US stocks, that are trading at compelling valuations, and holding them over many years. Some of its best and longest-held stocks include Mastercard, Alphabet, Amazon, American Express, and Visa.
MFF's latest NTA update, released on Monday of this week, informed investors that the company's net tangible assets stood at $5.286 per share on a pre-tax basis. Post tax (meaning how much the portfolio would be worth if MFF sold everything and paid taxes as a result) was $4.392 per share.
Today, MFF is trading at a price of $4.80 per share at the time of writing. That effectively means this LIC is trading at roughly a 10% discount to what its shares are really worth on a pre-tax basis right now.
Given how expensive other ASX dividend stocks are at the moment, that might give income investors a good reason to check out MFF Capital today. Especially considering this LIC has increased its dividends by an average rate of 27% per annum since 2017.
