The ASX stock MFF Capital Investments Ltd (ASX: MFF) can be one of the most effective choices for passive income, in my view.
For me, this business offers a number of pleasing characteristics including a growing dividend, a good yield and strong diversification.
Most of MFF Capital's life was spent as a pure listed investment company (LIC) that's focused on international shares. But, the business recently boosted its capabilities by acquiring a funds management business called Montaka, adding more investment research capabilities.
The business has a strong outlook for dividend growth, in my opinion. I think it's a great idea for unlocking $300 per month of passive income.
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Strong potential passive income
MFF Capital has increased its annual dividend each year since 2018, which is a pleasing record considering a number of other businesses have reduced their payouts during that time, such as Commonwealth Bank of Australia (ASX: CBA), Woodside Energy Group Ltd (ASX: WDS) and Fortescue Ltd (ASX: FMG).
Impressively, in the 2025 financial year, MFF hiked its annual dividend by around 30% to 17 cents per share. Not many ASX dividend shares grew their payout by that much in FY25. The company has benefited from the strong performance of its investment portfolio. The businesses with a weighting of at least 5% in the portfolio are Mastercard, Visa, Bank of America, American Express, Meta Platforms, Amazon, Alphabet, Home Depot, Microsoft and UnitedHealth.
The ASX stock's leadership have indicated the business wants to continue growing the payout, but I will be conservative with my financial assumptions.
Firstly, if the business were to pay another annual dividend per share of 17 cents in FY26, that would translate roughly into a grossed-up dividend yield of 5%, including franking credits.
Let's take a look at what would be needed for $300 per month of passive income from this ASX stock.
Unlock good monthly payouts
MFF doesn't pay a dividend every month, so I think it's better to think of the goal as an annual target. Receiving $300 per month would translate into $3,600.
To get $3,600 of annual income, someone would need to own 21,177 MFF shares.
Of course, we could aim for a smaller target in passive income dollar terms and it wouldn't require buying as many MFF Capital shares.
With a large (accounting) profit reserve and a good outlook for further dividend growth in the coming years, I think this ASX stock is an excellent long-term pick. But, remember that share market volatility can affect a portfolio-style investment like MFF just like it can hit an individual business.
