ASX stock MFF Capital Investments Ltd (ASX: MFF) is one of my preferred ideas for passive income. It's one of the largest positions in my portfolio, partly because of how rewarding the dividends are and how confident I am about its future.
MFF is a listed investment company (LIC), one of the largest on the ASX. An LIC aims to make money for shareholders by investing in shares (or other assets) to generate returns.
LICs can fund the dividends they pay from returns they generate. If a LIC performs strongly, it can deliver a triple benefit – a good dividend yield, a rising dividend and capital growth.
Let's look at the elements of what makes MFF a great investment.
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Strong investment performance
MFF says that it aims to build lasting wealth for shareholders primarily through long-term ownership of advantaged businesses. Its strategy favours duration and enables the power of compounding.
The business has largely focused on global blue-chips which can provide pleasing long-term returns. This investment style has delivered good returns.
As of 30 June 2026, over the prior decade, its pre-tax net tangible assets (NTA) return (with taxes reinstated) has averaged 15.5% per year. I think most LICs would be very happy with that level of return over the last 10 years.
Over time, I expect the investment portfolio may change, and MFF has the investment flexibility to look for the best opportunities across the global (and ASX) share market.
Good passive dividend income
MFF has steadily grown its regular annual dividend per share each year since FY18, providing several years of dividend growth, and that trend continued in FY26.
The FY26 annual dividend per share was hiked by 23.5% to 21 cents per share. The MFF leadership has provided guidance that it's going to continue hiking its half-year dividend by another 1 cent per share in six months. MFF has been growing its half-year dividend each year since 2024. The next dividend is guided to be 12 cents per share in six months.
If the ASX stock continues with that track record, it would pay an annual dividend per share of 25 cents in FY27 – that would represent a grossed-up dividend yield of 6.7%, including franking credits, at the time of writing. It would also represent a year-over-year increase of 19%.
Pleasing capital growth
With all of the investment returns that MFF has generated over the years, the business has been able to provide pleasing dividends and the retained money is helping drive the MFF share price and NTA higher.
Over the prior five years, the MFF share price has climbed by 82%, at the time of writing.
Considering the excellent dividend payouts over the past five years, I'd say that MFF's capital growth has been very pleasing. Of course, past performance is not a guarantee of future performance.
$1,000 of passive income per month
MFF doesn't pay a dividend each month, it only pays every six months. But we can take that monthly goal and multiply it by 12 for an annual goal. Investors can then divide the received dividends into monthly chunks.
The FY26 final dividend of 11 cents per share will be paid in October and the LIC expects to announce an interim dividend of 12 cents per share in six months. Therefore, we're looking at 23 cents per share of dividends within the next 12 months.
To receive $12,000 of dividend cash within the next year, an investor would need to own 52,174 MFF shares.
If we include franking credits as part of the income, then an investor would only need 36,519 MFF shares for $12,000 of annual passive income.
I think this would be a solid investment for the long-term right now and I'd happily buy a bit more of the ASX stock at this price.
