If I were a retiree, there would be only a few ASX shares I'd be willing to rely heavily on for returns, including dividends. One of the top stocks I'd consider for the long-term is L1 Long Short Fund Ltd (ASX: LSF).
This business is one of the larger listed investment companies (LICs) available to Australians. The job of a LIC is to invest in shares and other assets on behalf of shareholders. It's operated by the fund managers and analysts at L1 Group Ltd (ASX: L1G).
When I think about what retirees may be searching for, or may benefit from, I think the ASX share can tick all of the boxes.
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Compelling passive dividend income
The feature retirees may be after most is passive income. Dividends from ASX shares are a great option, in my view.
For me, it's not just a question of how large the dividend yield is. I'd also want to see dividend reliability and payout growth as well.
L1 Long Short Fund has certainly ticked the box for income. It has increased its annual dividend per share every year since 2021, when it first started paying a dividend. The LIC changed to quarterly dividends in 2025, and it has grown its quarterly dividend every quarter since then.
The business has a stated goal of increasing its dividend for shareholders, which it's clearly doing.
If the business continues to increase its dividend payout each quarter over the next 12 months, it would have a FY27 grossed-up dividend yield of 4.7%, including franking credits, at the time of writing. I think that would be a great starting dividend yield for retiree investors.
Pleasing diversification
Another aspect that retiree investors may really benefit from is the diversification that the LIC can provide.
It invests in both ASX shares and international shares, using long-term investing and short-selling strategies. Short selling is when you can generate profit if a share price goes down, so it's a good way to protect against falling markets.
Given its investments across Australia, New Zealand, North America, Europe and Asia, it can provide diversification for retiree portfolios that may be too focused on Australian assets (including property).
The LIC also tends to avoid investing in the tech sector or ASX bank shares, so it can generate returns in ways that differ from those of typical exchange-traded funds (ETFs) that focus on US or ASX shares. Its three most fruitful sector hunting grounds have been materials, industrials and communication services.
Strong portfolio returns is delivering capital growth
The portfolio strategy has been very effective, generating strong net returns. In the past five years, the LIC's net return has been an average of 16.1% per year. Only some of this was used to pay dividends, with the rest of the investment returns retained within the business.
The increasing portfolio value has driven a rise in the share price. Over the past five years, the L1 Long Short Fund share price has risen 78% (at the time of writing).
Of course, past performance is not a guarantee of future returns, but I'm optimistic it can continue to deliver pleasing long-term returns.
