If an ASX dividend stock trades on a sturdy-looking 4.7% yield and pays you every single month to hold it, does that make it a perfect income stock?
Many income investors would argue it does. It certainly leaves little to be desired.
That's exactly what listed investment company (LIC) Plato Income Maximiser Ltd (ASX: PL8) has on the table today.
Plato is a LIC that specialises in providing dividend investors with a healthy stream of passive income, paid out in 12 dividend payments throughout the year.
It works, as most LICs do, by holding an underlying portfolio of ASX dividend stocks. This it owns and manages on behalf of its shareholders.
These ASX dividend stocks are selected based on both their dividend income potential, and an assessment of how sustainable and reliable that dividend income stream is likely to be into the future.
As of the company's most recent update, some of the largest positions in the Plato portfolio include BHP Group Ltd (ASX: BHP), Coles Group Ltd (ASX: COL), Woodside Energy Group Ltd (ASX: WDS), Medibank Private Ltd (ASX: MPL) and Macquarie Group Ltd (ASX: MQG).
As you can see, these holdings, plus others in the portfolio, represent a wide cross-section of the ASX's best dividend stocks. This arguably lends strength and income stability to Plato's income stream through diversity.
But let's go through some numbers.
A perfect ASX dividend stock for passive income?
So over the past 12 months, this ASX dividend stock has paid out an annual total of 6.6 cents per share, divided into 12 payments of 0.55 cents per share.
At the current Plato share price of $1.42 (at the time of writing), that gives Plato Income Maximiser a trailing dividend yield of 4.66%.
Considering each and every one of these payments comes with full franking credits attached, that yield is worth even more to many Australian investors. Particularly those who are retired or are in superannuation pension phase.
No dividend stock offers a completely safe stream of income, of course. That's what term deposits or government bonds are for. However, this company has rarely cut its dividends in its eight-year history on the ASX. The last (and to date only) time it did so was during the COVID crash of 2020.
So, although no ASX dividend stock can really be called perfect, I think this one comes pretty close for investors seeking meaningful and reliable income.
