There are many income stocks on the ASX that have shown an ability to grow their dividends consistently over many years. These ASX dividend growth stocks range from the mature, slow-growers like Commonwealth Bank of Australia (ASX: CBA) and Telstra Group Ltd (ASX: TLS) to the up-and-comers like WiseTech Global Ltd (ASX: WTC) and TechnologyOne Ltd (ASX: TNE), which have juiced up their dividend payouts by breathtaking amounts in recent years.
This can spark a conundrum for the lazy investors out there, though – the investors who just wish to buy quality stocks growing their dividends at a fast clip, and leave them in the proverbial bottom drawer. The more mature companies like Telstra or CBA might offer big upfront yields. But they don't tend to grow them very fast.
The up-and-comers like Wisetech and TechOne are growing payouts quickly. But these kinds of dividend growth stocks arguably require investors to keep a close watch on them, given the fast-changing nature of the tech industry.
As such, the lazy investor might wish to find an ASX dividend growth stock that straddles these two paths.
MFF Capital Investments Ltd (ASX: MFF) is, at least in my view, that stock.
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The perfect dividend growth stock for the lazy ASX investor
MFF Capital is a listed investment company (LIC). This means that it holds an underlying portfolio of assets that it owns and manages on behalf of its shareholders. In MFF's case, these assets are mostly US stocks.
MFF's portfolio manager, Chris Mackay, is a co-founder of Magellan and a disciple of Warren Buffett's value investing style. He likes to buy high-quality companies at prices that make sense, and hold them through thick and thin. Some of the MFF portfolio's largest and longest-held positions include Alphabet, Mastercard, Visa, American Express, Home Depot and Amazon.
The beauty of a company like MFF is that its underlying investment decisions are in the hands of its fund manager, not you as the shareholder. As long as there is faith in this manager to invest prudently, investors can treat MFF Capital shares as a true bottom-drawer investment.
MFF does indeed have a strong track record of performance under Mackay's leadership. Its shares have returned, by my calculations, just under 12% per annum over the past ten years. That's share price growth plus dividends.
Speaking of dividends, MFF has one of the best track records of dividend growth around. The company has made this a priority, growing its annual payouts from 2 cents per share in 2017 to 17 cents per share (fully franked) over 2025. That's a compounded average growth rate of over 30% per annum. MFF has already told investors to expect another increase next year, too.
Given its bottom-drawer potential, as well as its stellar track record of providing dividend growth, I think MFF is the perfect stock for the lazy dividend growth investor right now.
