The ASX stock market is a great place to find ideas that have a good reputation for passive income. I much prefer a business that can deliver high and growing dividends over time, compared to a term deposit that offers limited payments.
The farmland landlord Rural Funds Group (ASX: RFF) is a real estate investment trust (REIT) that ticks many of the boxes I'd want to see if I were investing for reliable passive income.
Let's look at why it's a compelling option for generating $50 per week of income.
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Strong choice for passive income
Rural Funds doesn't pay a distribution every single week, but it does pay more regularly than many other ASX dividend shares. It pays on a quarterly basis. If an investor did want a weekly amount, they could just divide the quarterly amount into 13 weekly amounts or divide the annual amount into 52 pieces.
Rural Funds has provided guidance that it's going to pay an annual distribution of 11.73 cents per unit for FY26.
To receive $50 per week, we're talking about an annual total of $2,600. Using the projected payout for FY26, that means an investor would need to own 22,166 Rural Funds units for the desired passive income.
In the last few years, the business has maintained its distribution at 11.73 cents per unit, which I think is an appealing result for investors considering how much of a negative impact higher interest rates were (and could be again).
At the time of writing, the projection translates into a distribution yield of 5.8%.
But prior to FY23, the business had a track record of growing its annual distribution by at least 4% in most years between FY14 and FY22.
I think the business can grow its distribution again over time because of a few different factors.
Strong rental potential
Most of the rental income of the business benefits from annual rental indexation.
That rental growth is either a fixed annual increase or the increase is linked to inflation.
With that tailwind behind it, I think the farms' value and distribution payout can steadily improve over time, even if there are headwinds in the near-term.
On top of that, Rural Funds is investing in its farms to help improve the productivity and rental potential of the real estate. Those investments can include changing farms to a more rewarding crop, as well as investing in increasing water access and storage at a particular farm.
Investing in Rural Funds now seems like a great time because it's trading at a significant discount to its adjusted net asset value (NAV) of $3.10 as of 31 December 2025.
