MFF Capital Investments Ltd (ASX: MFF) shares are among the strongest picks for retiree passive income, in my opinion.
It's not a famous business like BHP Group Ltd (ASX: BHP) or Commonwealth Bank of Australia (ASX: CBA), but it's still very sizeable with a market capitalisation of more than $3 billion according to the ASX.
I would rather choose MFF over BHP and CBA for passive income because of MFF's solid dividend yield and impressive growth rate.
Let's look at how attractive the listed investment company (LIC) is for passive income.
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Solid dividend yield
Retirees may be focused on the amount of dividend income that could come in from an investment, so let's start with the dividend yield from the LIC.
MFF paid an annual dividend per share of 21 cents in FY26. That represents a trailing dividend yield of 4% excluding franking credits and 5.75% including franking credits. That's competitive with the best term deposit rates from banks like CBA.
But the dividend yield in the new financial year could be even larger.
The board of directors has already indicated that they plan to increase the payout again in FY27.
With its FY26 results, released in August, MFF said it plans to grow its interim dividend to 12 cents per share, and I expect the FY27 final dividend to be 13 cents per share.
Therefore, I'm expecting the FY27 annual dividend to be 25 cents per share. At the time of writing, with the MFF share price of $5.21, the forward dividend yield could be 4.8% excluding franking credits and 6.9% including franking credits.
Strong and regular dividend growth
The LIC has a great track record of delivering pleasing investment returns, which is helping fund impressive dividend increases.
As at 30 June 2026, the business reported that, over the prior decade, its post-tax net tangible assets (NTA) return averaged 14.7% per year, and over the past five years it averaged 14%.
Over the five years to FY26, the five-year dividend compound annual growth rate (CAGR) was 26%. I'd say that's an exceptional growth rate. It has increased its regular annual payout each year since 2018, so it already has an impressive dividend record.
In FY27, I expect the business to increase its annual payout by another 19%.
If it continues to increase its annual dividend by 4 cents per share each year, which I think it will, the payout would grow by a further 16% in FY28. Of course, dividends are not guaranteed payments.
Diversified portfolio
Many retirees may have their portfolios focused on Australian companies and property. I think it'd be a good idea to have some of our assets invested in international shares too.
As an LIC, the investment team can decide where they want to invest. MFF can look across the entire global stock market for ideas for opportunities.
MFF seeks businesses with competitive advantages and above-average prospects for profit growth.
This has led the business to own shares like Mastercard, Visa, Amazon, Alphabet, Microsoft, Bank of America and American Express.
With attractive dividends and the ability to change its portfolio over time, I think this is a great option for retirees to own for the long term.
