The Australian dividend stock MFF Capital Investments Ltd (ASX: MFF) is one of the largest positions in my portfolio, and I'm expecting it to play a major part in my portfolio for many years to come.
I really like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), though there are a few key factors that could make MFF Capital a better choice for passive income.
I'm expecting to own both of them in 10 or 20 years' time, but MFF may tick the boxes I'm looking at the most. Let me tell you why.
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Best global businesses
MFF Capital is an investment business that looks across the world for the best opportunities.
The Australian dividend stock currently has a portfolio full of leading businesses with strong economic moats.
If you were to think of which companies from across the world you'd want in a portfolio, MFF owns a number of them, including Mastercard, Visa, American Express, Meta Platforms, Amazon, Alphabet, and Microsoft.
Because of their commanding positions in their industries, I believe it would be extremely difficult for any competitor to challenge them and take significant market share.
Those US giants are so big now that I'm not expecting them to double in value any time soon, but they're the types of businesses that could deliver pleasing compounding earnings and, hopefully, their share prices over the long term.
Investment flexibility
The reason why I'm confident the business could be an excellent long-term Australian dividend stock pick is because the company has such a flexible investment mandate.
It can decide to invest in whichever global businesses it thinks are opportunities; it's not just a portfolio of US shares. It owns names like Lloyds Banking, DBS Group, CK Hutchison, Oversea – Chinese Banking, Prosus and, Allianz.
The business can change its portfolio, which means it can future-proof its portfolio to ensure it's focused on stocks with a good outlook. Whether that's a greater shift towards AI-related businesses or whatever else happens in the future, I appreciate how the MFF portfolio can adapt – it's not limited to a single industry, such as banking, mining, telecommunications, retail, or any other industry.
Strong passive income from the Australian dividend stock
The business has delivered pleasing dividend growth in the last few years. The annual ordinary payout has grown every year since 2018.
The last two dividends declared by the business come to an annual payout of 17 cents per share, which is a grossed-up dividend yield of 5.1%, including franking credits, at the time of writing.
It has built up a significant (accounting) profit reserve, meaning it can continue paying dividends for years to come. Plus, the payout has grown at a pleasing pace. In FY25 alone, the payout was hiked by around 30% to 17 cents per share.
