I like to make regular, smaller investments in my portfolio to build up positions in ASX dividend shares that I'm bullish about. MFF Capital Investments Ltd (ASX: MFF) was the latest investment I made, with a $1,100 purchase.
I invested last week, when the price was a bit lower. But, when I talk about the dividend yield below, I'll look at the yield at the time of writing.
I'm buying ASX dividend shares like MFF because of the investment exposure they provide as well as the compelling dividend payouts. One day, I'd love for my dividend income to be able to cover the core spending essentials in my life.
With that goal in mind, MFF looks like a leading contender for that purpose.
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Strong dividend income
Let's start with the passive income payments.
Over the past five years, the investment business has grown its six-monthly dividends at a compound annual growth rate (CAGR) of 26%.
It intends to grow its FY27 first-half dividend by another 20% to 12 cents per share and I expect the FY27 final dividend will be increased by 18% to 13 cents per share.
If the ASX dividend share does deliver on those expectations, the annual dividend per share would be 25 cents. That's a FY27 grossed-up dividend yield of 6.6%, including franking credits.
That's just the starting dividend yield – if it continues growing the payouts, then the dividend yield could quickly grow to more than 7%, then 8% and so on over the coming years.
Impressive investment process
A big factor in funding such a pleasing dividend history has been its investment performance.
Over the five years to 30 June 2026, its post-tax net tangible assets (NTA) has grown at an average of 14%.
With its portfolio, its goal is to build lasting wealth for shareholders through ownership of a portfolio of advantaged businesses.
Its investment mandate is unconstrained – it's not limited to certain sectors, geographic markets or size of business. This flexibility allows the MFF to "adapt to changing investment market conditions and pursue opportunities that it identifies as offering attractive risk-adjusted investment returns".
Currently, some of its biggest holdings include Mastercard, Alphabet, Visa, Bank of America, Amazon and Microsoft.
Capital growth
With those impressive investment returns, the business has only paid out part of its profits as dividends. The retained amounts can compound for investors, which is a key tailwind for the MFF share price.
Over the past five years, MFF shares have risen by 84%. I think it'll continue rising in the long-term, though I'm not expecting the next five years to be as strong as the last five years, particularly with how it needs to fund its rising dividends.
But, as an ASX dividend share, it ticks the boxes of what I'm looking for.
