Income investors on the ASX typically have two choices when it comes to stock picking. One, they can go for the dividend payers that offer large yields upfront, but offer little in the way of dramatic growth going forward. That might include shares like Westpac Banking Corp (ASX: WBC) or Telstra Group Ltd (ASX: TLS). Otherwise, investors can consider the dividend growth stocks that might not have a lot to show in current yield, but are growing payouts at a blistering pace.
Companies like WiseTech Global Ltd (ASX: WTC) and TechnologyOne Ltd (ASX: TNE) arguably fall into this bucket.
However, there is a middle road that companies can walk between these two other paths. It is a narrow one, but it can potentially provide the best of both worlds of dividend investing.
I think MFF Capital Investments Ltd (ASX: MFF) belongs in this sweet spot.
MFF is a listed investment company (LIC). Like most LICs, it owns and manages a portfolio of other, underlying investments on behalf of its shareholders. In MFF's case, these investments consist mostly of high-quality US stocks.
MFF follows a Warren Buffett-esque strategy of buying high-quality companies that have shown that they possess a moat and can compound their revenues and earnings over long periods of time. These companies are purchased at compelling prices and left alone in MFF's portfolio to work their magic. Some of this company's long-term investments include Amazon, Alphabet, Mastercard, Home Depot, and Visa.
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The best dividend growth stock on the ASX?
Over the past decade, MFF has used the proceeds (and dividends) from its investments to fund a growing dividend of its own. This dividend growth has been so dramatic that it might even qualify MFF Capital Investments as one of the ASX's best dividend growth stocks.
Let's get into why.
Starting with a pair of bookends, MFF grew its annual dividend from 2 cents per share in 2017 to the 17 cents per share investors enjoyed in 2025. That's a compounded average growth rate (CAGR) of 30.67% per annum. Dividend growth has been particularly strong in recent years, too. MFF raised its annual dividend from 7.5 cents per share in 2022 to 9.5 cents in 2023 (up 26.7%), and then again to 13 cents per share in 2024 (up 36.8%).
Last year, MFF also informed investors that it plans on paying out an interim dividend worth 10 cents per share in 2026. If that turns out to be the case, it would represent a 25% hike over 2025's interim dividend of 8 cents per share.
MFF's dividends have historically come with full franking credits attached too.
This blistering dividend growth has been a windfall for long-term investors. To illustrate, someone who purchased shares at around $2 each ten years ago would be looking at a yield-on-cost of 8.5% today.
Despite this impressive dividend growth, MFF shares don't come with the downside of a small yield today. At yesterday's closing price of $4.96, MFF shares were trading on a trailing dividend yield of 3.43%.
