The ASX dividend share space is a great place to find investments offering passive income.
I think the stock market is the best hunting zone to find names that can pay a good dividend yield, deliver capital growth and organically raise the passive income. Other non-share investments just don't seem as appealing on that side of things.
If I'm investing for passive income, which I regularly do, I want to focus on investments that can give me a high level of confidence that they're going increase the payout annually for the foreseeable future.
I really like the three ASX dividend shares below for dividends and potential capital growth. Let's dive into why I'd happily spread $10,000 across them.
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MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is mostly a listed investment company (LIC), but also has a new funds management segment called Montaka.
The main way MFF makes profit for shareholders is by holding a portfolio of high-quality global shares that are expected to compound earnings in the coming years. By just investing in the best businesses in the world, it has produced solid returns which have helped it fund growing dividends to MFF shareholders.
It also recently acquired Montaka to give MFF access to more investment ideas and research, while also unlocking another earnings growth avenue. A rise in the fund size of Montaka Global Fund – Active ETF (ASX: MOGL) and Montaka Global Extension Fund – Complex ETF (ASX: MKAX) helps generate management fee earnings for MFF.
MFF has guided it's going to pay an annual dividend per share of 21 cents in FY26, which translates into a grossed-up dividend yield of 6.1%, including franking credits, at the time of writing. That means the ASX dividend share is expecting to increase its FY26 dividend by more than 20% year-over-year.
WCM Global Growth Ltd (ASX: WQG)
WCM Global is another LIC with an impressive record of portfolio performance and dividend growth.
The investment team at WCM – based in California's Laguna Beach – aim to look for businesses with an expanding economic moat/improving competitive advantages. The LIC also wants to find businesses that have a corporate culture that fosters the improvement of that economic moat.
Its portfolio mix of US shares and international shares provides investors with diversified holdings, along with compelling potential to deliver returns.
By investing in those high-quality names, WCM Global Growth has managed to outperform the global share market return, whilst paying a rising dividend over the last several years.
The ASX dividend share expects to pay an annual dividend in FY26 that equates to a grossed-up dividend yield of 6.7%, including franking credits, at the time of writing.
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
I couldn't write this article without mentioning the leader of dividend growth on the ASX, Soul Patts.
It's an investment conglomerate that has already been listed on the ASX for more than 120 years and it hasn't missed paying a dividend in all of that time. Additionally, the business has increased its regular annual payout every year since 1998, which is an incredible record for an ASX dividend share.
The business has built an impressive and largely uncorrelated portfolio across a variety of defensive sectors that can provide cash flow for the business in most economic conditions, giving resilient funding for the growing dividend. The ASX dividend share regularly invests to expand its portfolio and boost its long-term growth potential. I'm forecasting that Soul Patts could pay an annual dividend per share in FY26 that at least translates into a grossed-up dividend of 4.2% (if not more), including franking credits, at the time of writing.
