My portfolio is heavily weighted towards ASX dividend shares that can provide a mixture of dividends and capital growth. I like both types of returns because I can become wealthier over time through a rising portfolio value, while experiencing larger dividend payouts and benefiting my bank account. That cash can be put towards more shares or life expenses.
The three ASX dividend shares I'm going to highlight have a track record of growing their payouts, and I expect further growth in the coming years.
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MFF Capital Investments Ltd (ASX: MFF)
MFF Capital is best known as a listed investment company (LIC), though it recently acquired a funds management business, giving it an operational element.
The ASX dividend share has a portfolio focused on strong, global businesses with great competitive advantages and has the potential to grow profits in the long term. Its biggest positions are currently Alphabet, Amazon, Mastercard, and Visa.
Its high-quality portfolio picks have led the MFF portfolio to deliver strong investment returns over the last 5, 10, and 15 years. This has allowed the business to build an impressive profit reserve, allowing it to pay large and growing dividends.
The company's regular annual dividend has increased each year since FY18, and it expects to grow its annual dividend in FY26 by 23.5% to 21 cents per share. That's a current grossed-up dividend yield of 5.9%, including franking credits.
Washington H. Soul Pattinson and Co Ltd (ASX: SOL)
Soul Patts is another impressive investment business that has been listed for more than 120 years.
The investment house has a portfolio spread across a variety of assets that are largely uncorrelated and can provide Soul Patts with defensive, diversified cash flow, which funds Soul Patts' impressive and growing dividends.
The ASX dividend share's portfolio includes investments across energy, resources, property, swimming schools, agriculture, water entitlements, electrification, credit, financial services, building products, and plenty more.
How good are the dividends? It's the reliability and consistent growth that attracted me. Its regular annual payout has been hiked every year since 1998. That's the longest record of consecutive dividend growth on the ASX.
It currently has a grossed-up dividend yield of 3.4%, including franking credits.
L1 Long Short Fund Ltd (ASX: LSF)
This business is another LIC in my portfolio. The ASX dividend share invests quite differently compared to a typical fund manager. It invests in both ASX and international shares through both long-term investing and short selling.
The ASX dividend share likes to invest in businesses with low price-to-earnings (P/E) ratios and still deliver good earnings growth. I think the investment team have shown a particular skill at investing at the right times in cyclical and commodity-based businesses.
Past performance is not a guarantee of future returns, of course, but the L1 Long Short Fund's portfolio return has helped it increase its dividend regularly over the last few years. The portfolio has returned an average of 17% per year over the last five years, though that's not guaranteed to continue for the next five years.
It's now paying a quarterly dividend and increasing that payment every quarter. I expect the next four quarterly dividends will come to a grossed-up dividend yield of 4.9%, including franking credits.
I highly rate these three ASX dividend shares, and I expect to continue buying more shares in them in the coming years.
