I'm a big advocate of ASX dividend shares because they can provide investors with excellent passive income.
The best dividend businesses can provide investors with both a good dividend yield and capital growth over time.
I consider the three ASX dividend shares below as three of the best options – I thought that five years ago, I think that today, and I'm confident they will be great dividend income picks in five years.
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Washington H. Soul Pattinson and Co. Ltd (ASX: SOL)
I view Soul Patts as one of the very best passive income businesses because of the incredible dividend growth streak it has provided.
Soul Patts has increased its regular annual payout every year since 1998. No other ASX share has a growth streak that started in the previous century.
On top of that, the investment house has paid an annual dividend every year since it listed more than 120 years ago, including through world wars, global pandemics and economic recessions.
This S&P/ASX 200 Index (ASX: XJO) share doesn't rely on one core activity for its earnings – it has a diversified portfolio across a range of ASX shares, privately-owned businesses, property and credit. It has maximum investment flexibility to find the best opportunities with its money and create a portfolio that generates cash flow in all economic conditions.
I'm expecting the ASX dividend share's FY26 payout to be a grossed-up dividend yield of around 4%, including franking credits, at the time of writing.
They are the key reasons why I've made this business my largest ASX dividend shareholding.
Future Generation Australia Ltd (ASX: FGX)
I've held this listed investment company (LIC) in my portfolio for several years and I expect it be a holding for many years to come.
There are multiple reasons to like the LIC. For starters, there are no management fees involved – instead, it donates 1% of its net assets each year to youth charities. It's invested in a variety of funds from different fund managers who all work for free to enable those charitable donations.
The fact it's invested across more than ten funds means it provides investors with significant diversification across hundreds of underlying holdings.
In terms of being a top ASX dividend share, it has grown its annual payout every year for the last decade and currently offers investors a grossed-up dividend yield of 7.7%, including franking credits, at the time of writing.
MFF Capital Investments Ltd (ASX: MFF)
MFF built a reputation as one of the leading LICs on the ASX by investing in a portfolio of high-quality shares, namely some of the leading global US tech shares and payment giants.
The business recently expanded into funds management by making an acquisition, giving it another growth avenue and providing more investment team capabilities to MFF.
One of its main goals is to increase its dividend each year. It has hiked regular payout each year over the last several years at an impressive double-digit rate thanks to the strong performance of its portfolio.
I'm predicting MFF will increase its annual payout to 21 cents per share in FY26, translating into a forward grossed-up dividend yield of 6.2%, including franking credits, at the time of writing.
