The ASX dividend share Future Generation Australia Ltd (ASX: FGX) may not be one of the most famous businesses for dividends, but I think it can offer a lot of positives for retirees.
The business operates as a listed investment company (LIC), which means it invests in other shares for the benefit of shareholders.
A key difference with this LIC compared to most other LICs is that the ASX dividend share's fund managers work for free so that the LIC can donate 1% of net assets each year to youth-related charities.
While the philanthropy is great, it doesn't necessarily translate into a compelling investment choice. Let's look at the advantages for the retirees.
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Appealing dividends
There are few businesses on the ASX that have increased their payout every year for the past decade. Future Generation Australia is one of them. It has increased its annual dividend each year going back to 2015.
Dividend hikes are not guaranteed, of course, but it's good to see that the business has tried to regularly increase payments to shareholders.
Pleasingly, the ASX dividend share increased its payout by 2.8% to 7.2 cents per share in 2025. That translates into a grossed-up dividend yield of 7.5%, including franking credits.
Diversification
Another pleasing element to consider is that the business has excellent diversification characteristics for retirees.
With how Future Generation Australia is invested in the funds of 16 fund managers, it can provide investors with an excellent level of exposure across a large number of businesses.
At the end of February 2026, it reported that it had indirect exposure to more than 450 businesses across different sectors.
These businesses are of various sizes and the ASX dividend share also has exposure to a cash allocation, providing protection during market declines, as we've seen over the past several weeks.
Long-term growth
Future Generation Australia pays for its dividends out of the investment returns that it has generated.
Over the ten years to February 2026, its portfolio delivered an average return per year of 10.1%, which is large enough to deliver a large and growing dividend, donate 1% per year and deliver growth of the net tangible assets (NTA). The NTA is a key driver of the Future Generation Australia share price.
The business has traded at a discount to its NTA before tax, so it's a pleasing investment for retirees to buy at a discount to its actual underlying value.
If the long-term return of the portfolio can remain above 10% per year, then it could deliver capital growth and dividend growth in the longer-term.
