The ASX dividend stock Bailador Technology Investments Ltd (ASX: BTI) is still 33% lower than its peak in October 2021, as the chart below shows.
The company's goal is to invest in small, private, growing technology companies at attractive valuations.
It's already invested in a number of businesses including Siteminder Ltd (ASX: SDR), DASH, Updoc, Access Telehealth, Expedition Software, Rosterfy, PropHero, Hapana, MOSH and Nosto.
Those investments give it exposure to various areas including travel, accommodation, experiences, wealth management, digital healthcare, volunteer management, property investment, fitness studio management and more.
There are a few reasons to like this business for passive income, so let's get into it.
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Strong passive income from the ASX dividend stock
The business aims to pay investors a 4% dividend yield on the pre-tax net tangible assets (NTA) of the company. It tells investors every month what its portfolio is worth in pre-tax and post-tax NTA terms.
The 4% dividend yield translates into a grossed-up dividend yield of 5.7%, including franking credits.
But, the ASX dividend stock is currently trading at a 37% discount to its portfolio value, the pre-tax NTA, of $1.95 per share. That means the grossed-up dividend yield could be 9.1%, including franking credits.
Appealing businesses
The next reason to like Bailador is its compelling holdings. Technology companies are capable of delivering strong long-term returns because of their ability to grow revenue rapidly at an appealing profit margin.
Bailador's businesses are performing strongly, which is a good tailwind for long-term value creation.
In FY25, the weighted average portfolio company revenue growth was 47%, with 87% of revenue earned by companies in the portfolio being recurring. It also said that the weighted average gross profit margin was 65%.
Bailador only invests in businesses with appealing unit economics and large addressable markets, so the outlook is bright for the portfolio.
Cheap discount and growing NAV
I've already mentioned that the ASX dividend stock is trading at a huge discount to its NTA, which already makes it look like a bargain to me. The company's investments are going up in value over time as they deliver on their potential, making the NTA seem further undervalued.
Additionally, Bailador points out that it has a "well-established track record of realising cash for its private company positions, doing so at a premium to carrying value on every occasion. The average premium of Bailador's cash realisations over carrying value for private companies is 39%."
In other words, the ASX dividend stock is trading at a large discount to its NTA, and the company has a track record of selling its investments at a large premium to the NTA.
Overall, I think this is a very good time to invest in the business.
