The ASX dividend share MFF Capital Investments Ltd (ASX: MFF) offers numerous elements that makes this a great choice for retirees.
MFF is best known as a listed investment company (LIC), which is the same sort of business as Australian Foundation Investment Co Ltd (ASX: AFI) and Argo Investments Ltd (ASX: ARG).
The business has a very promising future, in my view, for both dividend payments and capital growth. Let's run through why MFF is a top pick for passive income.
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Good dividend yield
The first thing that many retiree investors may want to know is how much passive income is this investment going to pay.
As a LIC, MFF has a lot of control over what the dividend payments will be. Many exchange-traded funds (ETFs) can't offer the same level of reliability.
For FY26, the board of directors of MFF has indicated the business will pay an annual dividend per share of 21 cents. This translates into a dividend yield of 4.6% excluding franking credits and 6.6% including franking credits.
Great payout growth by the ASX dividend share
The business is growing its annual dividend at an impressive pace, each half-year dividend is 1 cent per share bigger than the last. Its two FY26 half-year payments of 21 cents and 20 cents per share are bigger than the 19 cents and 18 cents per share in FY25.
In percentage terms, the FY26 annual payment will be 23.5% higher than the FY25 payout. In dollars (and cents) terms, that's a 4 cents per share rise.
I think there's a good chance the FY27 annual payout could be 25 cents per share, which would be a grossed-up dividend yield of 7.9%, including franking credits.
There's no guarantee the business will continue with the 1 cent per share growth trend, but I think it will. At the very least, MFF has said it intends to continue increasing its payout – that's a great sign for retirees.
Excellent portfolio
You may be wondering how the business actually makes money. It aims to invest in high-quality businesses from around the world that have competitive advantages which seem like it'll allow them to deliver above average profit growth/investment returns.
Some of its biggest investments include Mastercard, Alphabet, Visa, Bank of America, Amazon, Meta Platforms, American Express, Home Depot, Microsoft, United Health, Lowe's and L1 Group Ltd (ASX: L1G).
These businesses collectively have a lot of earnings growth potential, which could increase their valuations coming years. This could translate into great returns for MFF.
As a bonus, the ASX dividend share is likely trading at a discount to its net tangible assets (NTA), which I'd describe as appealing. It's great for retirees to buy strong businesses for cheaper than they're worth.
