If I told you there was an ASX dividend stock on our market right now that trades with a fully-franked dividend yield close to 4% and has grown its dividends per share by an average of 27% per annum over the past five years, you might not even believe it.
That combination is a rare occurrence on the ASX. Most blue-chip ASX stocks only tend to grow their dividends at single-digit rates at best.
But that is indeed the case with MFF Capital Investments Ltd (ASX: MFF). So let's dive into whether this is a dividend stock worth buying today.
MFF Capital Investments is a listed investment company (LIC). That means it is a company that owns and manages an underlying portfolio of investments on behalf of its shareholders. In MFF's case, this company tends to own a concentrated portfolio of US stocks, selected in a manner that mirrors Warren Buffett's classic investing style. Buffett is famous for his long-term investing approach: buying shares of high-quality companies at prices that make sense and holding them for long periods. Sometimes indefinitely.
Some of the stocks that have been part of MFF's portfolio for many years include Alphabet, American Express, Amazon, Mastercard, Visa, and Bank of America.
But let's talk dividends.
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An exceptional ASX dividend stock?
As we've already touched on, MFF is an enthusiastic dividend payer. The company has delivered an annual dividend increase every single year since 2018. That year saw the company fork out an annual total of 3 cents per share in dividends. By 2021, that had grown to 6.5 cents per share. By 2023, MFF was up to 9.5 cents per share, and hit 17 cents per share last year.
MFF has already paid its 2026 interim dividend, which was worth 10 cents per share. The company has told investors to expect a final dividend of 11 cents per share later this year. If MFF does hit 21 cents per share in 2026 dividends, it will mean it has grown its dividends by a compounded average growth rate of 27% per annum since 2021. All payouts came with full franking credits attached, too.
Most companies that sport those kinds of dividend growth rates trade on very low yields. However, MFF shares are currently (at the time of writing) on a trailing dividend yield of 3.86% and a forward yield of 4.28%.
Let's assume, for a moment, that MFF keeps up its blistering dividend growth rate over the next five years (which is by no means assured). If that's the case, investors could receive a substantial upfront yield with a purchase today and would still see their dividend cash flow double in under five years. An alluring prospect.
