There are some ASX dividend stocks I'd rather own for income than rely on the Age Pension.
The Age Pension is wonderful and generous, and it's steadily growing over time. But there are ASX passive income ideas that are growing their payouts faster and offer a compelling dividend yield.
L1 Long Short Fund Ltd (ASX: LSF) is a listed investment company (LIC) that's offering investors numerous benefits. Let's dig into those positives.
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Dividend yield and payout growth
We'll start with the passive income, seeing as that's the focus of this article.
The LIC recently started paying investors a quarterly dividend, which is very pleasingly regular.
I expect the business to pay dividends that total 15.8 cents per share over the next 12 months, which equates to a future grossed-up dividend yield of 5.1%, including franking credits.
The business started paying an annual dividend in FY21 and has increased its dividend every year since then. Since switching to quarterly payouts, it has grown its quarterly dividend every quarter.
The dividend is increasing at a pleasing pace, I expect the combined last two quarterly dividends of FY26 will be 15% higher than the FY25 second half dividend. That's a very pleasing rate of annual growth, in my view – far stronger than today's elevated inflation.
Diversification
Another benefit to owning the L1 Long Short Fund is that the LIC owns a diversified portfolio which usually gives investors exposure to a number of sectors such as materials, industrials, communication services, financials and utilities.
Currently, some of the ASX dividend stock's key areas of focus include gold, copper, construction materials, infrastructure and select financials.
L1 does a great job at investing in unloved shares and sectors that look undervalued but can still deliver good returns.
Its portfolio is tilted towards quality value stocks, with its average long position trading on a price/earnings (P/E) ratio of 10, with double-digit earnings per share (EPS) growth and modest debt levels.
Capital growth
Another benefit of ASX shares is that they can deliver long-term capital growth as they increase their underlying value.
L1 Long Short Fund has delivered strong investment returns, allowing it to hike its payouts and deliver share price growth as its portfolio increases in value.
The portfolio returned an average of 16.9% per year over the five years to 30 June 2026, driving a 70% rise in the L1 Long Short Fund's share price over the period.
Of course, past performance is not a guarantee of future returns.
How many shares it takes to equal the Age Pension
The maximum level of income that an Australian can get from the Age Pension equates to around $1,200 per fortnight or around $31,200 annually.
Based on that, excluding franking credits, an investor would need 197,469 L1 Long Short Fund shares. But, with a growing dividend and rising share price, it makes me think the ASX dividend stock would be an excellent long-term investment.
It wouldn't be the only investment I have in a dividend portfolio, but I'm happy it's one of the largest positions in my own portfolio.
