The ASX dividend stalwart Pinnacle Investment Management Group Ltd (ASX: PNI) is a leading pick for passive income, and this is a great time to invest, in my view.
Pinnacle is an intriguing company – it invests in funds management businesses and helps them grow by offering a variety of services including seed funds under management (FUM), working capital, technology, compliance, legal, finance, fund administration, distribution and client services.
Why would a fund manager want all of those services? It would allow them to focus on the investing rather than administrative tasks. Ultimately, investing is what clients are paying for.
Pinnacle is invested in around 20 fund managers including Hyperion, Plato, Palisade, Resolution Capital, Solaris, Antipodes, Spheria, Metrics, Coolabah, Five V, Life Cycle and Pacific Asset Management.
Pinnacle recently announced it was investing in the largest independent, multi-strategy private markets platform in Japan, giving Pinnacle further geographic diversification.
Despite being in the volatile financials industry, this ASX dividend stalwart has been able to give investors a pleasing dividend and I'm expecting more progress in the coming years.
Strong passive income credentials
The business has grown its annual dividend payout every year between FY18 to FY25, aside from FY20 when it maintained the dividend due to the impacts of COVID-19.
In FY25 alone, the company hiked its annual dividend per share by 43% to 60 cents per share. There were few S&P/ASX 200 Index (ASX: XJO) shares that increased their cash payment by close to that in FY25. At the time of writing, that payout translates into a grossed-up dividend yield of 4.3%, including franking credits.
The business has funded those huge dividend increases from the impressive progress of the earnings per share (EPS), which rose 37% to 62.4 cents in FY25.
The five-year compound annual growth rate (CAGR) of EPS and the dividend has been more than 25%. Of course, past performance is not a guarantee of future performance, but the outlook is compelling for higher future dividend payments.
Pleasing progress by the ASX dividend stalwart
For starters, the total affiliate (fund manager) FUM reached $197.4 billion at 30 September 2025, up 10% from $179.4 billion at 30 June 2025. This is a core driver of earnings (and the dividend).
The client inflows remain very positive across the board, with total net inflows of $13.3 billion for the three months to 30 September 2025, including $4 billion from Australian retail net inflows, $2.9 billion of international net inflows and $6.4 billion of Australian institutional net inflows.
Its affiliates predominantly have a large track record of delivering outperformance of their respective benchmarks, providing further support for FUM growth.
Overall, there's a lot to like about the ASX dividend stalwart.
