We don't necessarily need to access the passive income immediately for it to be a good investment. Australians may appreciate owning investments with stable earnings that deliver consistent payouts year to year.

Given that superannuation has a lower tax rate than individual tax rates for full-time earners, there's less of a headwind for the after-tax passive income returns compared to investments made outside of super.

There are many different passive income investments available to people who utilise self-managed superannuation funds (SMSFs). Other super funds can allow investors to invest in assets such as S&P/ASX 300 Index (ASX: XKO) shares – many businesses in that index are appealing options for income.

How to generate $2,500 of monthly passive income from superannuation

Each household has a different financial situation. There isn't a one-size-fits-all approach that I can outline that would say what everyone's net income would be. With that in mind, I'll just talk about gross income, which is before taxes and expenses.

Generating $2,500 of monthly passive income translates into $30,000 per year.

The amount you need to invest to reach that income goal depends on the dividend yield, or interest rate, of the investments.

I'll give you an example. If someone had $1 million invested with a 3% dividend yield, it would generate $30,000 of annual income.

If the dividend yield were higher, an investor wouldn't need as much invested in superannuation to create that same level of annual or monthly passive income.

For example, if an investor's portfolio had a 4% dividend yield, an investor would require $750,000.

A 5% dividend yield would mean investors require a $600,000 portfolio.

If the dividend yield was 6% then the portfolio value required would only be $500,000.

Where I'd invest for a high dividend yield

If I were looking for a high level of monthly passive income, I'd focus on businesses with a good dividend yield but also have delivered reliability.

Some of the names I'd consider would be MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG), Future Generation Global Ltd (ASX: FGG), Future Generation Australia Ltd (ASX: FGX), Centuria Industrial REIT (ASX: CIP), Charter Hall Long WALE REIT (ASX: CLW), Hearts and Minds Investments Ltd (ASX: HM1), Rural Funds Group (ASX: RFF) and PM Capital Global Opportunities Fund Ltd (ASX: PGF).

But, I also wouldn't ignore investments with somewhat lower yields that have a track record of regular dividend growth as well as appealing capital growth.

The post How much is needed in superannuation to target a $2,500 monthly passive income? appeared first on The Motley Fool Australia.

I like to own businesses that generate passive income in my bank account while also delivering long-term capital growth.

All three of the names I'll highlight each have a weighting of more than 10% in my portfolio. Let's run through the appeal of each of them.

Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

This business has been one of my favourites for a very long time, and I imagine it will continue to be so for decades to come.

The investment conglomerate has built a diversified portfolio across a range of sectors, including resources, energy, financial services, property, retirement living, swimming schools, electrification, and so on.

Its investments are themselves growing, while the business can also expand its portfolio with retained earnings each year. It's this combination that helps the company's net asset value (NAV) and share price.

Soul Patts has increased its annual dividend per share every year since 1998, which is the best record for longevity on the ASX. Additionally, it has paid a dividend every year in its 120-year-plus history.

I think this business is one of the best options for a combination of long-term capital and passive income growth. The current grossed-up dividend yield is 3.5%, including franking credits.

MFF Capital Investments Ltd (ASX: MFF)

MFF is another leading business for passive income. The company's regular annual dividend has increased every year for the past several years.

The listed investment company (LIC) invests in high-quality shares that are competitively advantaged (strong economic moats) with compelling growth outlooks.

With an excellent, diversified portfolio, MFF has achieved strong investment returns and this has funded very good dividends.

In FY26, the company grew its annual dividend per share by 23.5% to 21 cents. I expect the business will increase its FY27 annual dividend by 19% to 25 cents per share.

I think it's a great option to get exposure to impressive global blue chips as well as strong passive income.

I believe its FY27 grossed-up dividend yield will be 6.7%, including franking credits, at the time of writing.

L1 Long Short Fund Ltd (ASX: LSF)

The third ASX dividend share that's a major position in my portfolio is this LIC, which uses a mix of long-term investing and short-selling in ASX and international shares to generate strong returns.

The L1 team generally likes to look at businesses with low price-earnings (P/E) ratios, solid earnings growth, and a good outlook. That generally means avoiding (long-term) investing in tech shares and instead focusing on names in areas like resources, energy, and unloved names in other sectors.

L1 Long Short Fund is paying a quarterly dividend to investors, and this payout is increasing every quarter, which is a pleasing growth trajectory.

I expect the FY27 annual dividend will grow by at least 11% year over year, translating into a potential grossed-up dividend yield of 4.6%, including franking credits.

With the above three ASX dividend shares, I believe my dividend cash flow is on a very good course.

The post Why these 3 top ASX dividend shares are my biggest holdings appeared first on The Motley Fool Australia.

For some people, retiring early sounds good because it could mean enjoying more of life, stopping before the body can't do the physical work anymore, or simply getting away from the desk.

Whatever the reason for wanting $120,000 per year of passive income, unlocking that level of dividends is enticing.

Use compounding to build wealth

One of the best things that investors can utilise to get to retirement is the power of compounding.

Albert Einstein once supposedly said about compounding:

Compound interest is the eighth wonder of the world. He who understands it, earns it; he who doesn't, pays it.

Compounding allows our ASX share investments to grow in value over time without us needing any more money ourselves to increase that value.

By regularly putting additional money into the stock market, investors can see the value of their portfolio increase.

I'll run through two examples of how it could work.

If someone is 25 and can invest $1,000 per month, they'd be able to invest $12,000 per year. Assuming the portfolio returns an average of 10% per year, that portfolio would grow to be worth $1.97 million after 30 years.

With the second example, let's imagine someone is 30 and has more earning power, allowing them to invest $2,000 per month. If the portfolio were to return 10% per year, it would grow to $2.36 million after 25 years.

Which ASX shares I'd buy for passive income to retire

If we go with those two examples above, a $1.97 million portfolio would require a portfolio dividend yield of approximately 6.1% to make $120,000 of annual passive income. Meanwhile, a $2.36 million portfolio would require a dividend yield of 5.1%.

I'm going to highlight some ASX shares with a lower-to-medium dividend yield and some with a higher dividend yield.

Some of the stocks with a dividend yield of around 5% (or a little less) that I like include Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), L1 Long Short Fund Ltd (ASX: LSF), Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), APA Group (ASX: APA), Coles Group Ltd (ASX: COL), Telstra Group Ltd (ASX: TLS) and WCM Quality Global Growth Fund (ASX: WCMQ).

The ASX shares that have a higher dividend yield that I'm a big fan of with a higher dividend yield include WCM Global Growth Ltd (ASX: WQG), MFF Capital Investments Ltd (ASX: MFF), Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG) and Hearts and Minds Investments Ltd (ASX: HM1).

The post How much do I need to retire on $120,000 a year at 55? appeared first on The Motley Fool Australia.

It may not be as popular as names like BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA) or Woolworths Group Ltd (ASX: WOW). But, I think MFF is better than each of those ASX blue-chip shares for multiple reasons.

Let's get into what makes it such a good buy.

Diversification

Each of the large ASX companies I mentioned above is an impressive business with significant operations.

However, an investment with MFF offers much more diversification because it owns a portfolio of shares, whereas the ASX blue-chips are singular businesses.

MFF aims to invest in competitively advantaged businesses, which are normally global blue-chip stocks.

Its largest holdings are names like Mastercard, Alphabet, Visa, Bank of America and Amazon.

The ASX dividend share's holdings have been long-term winners, and I believe there's a good chance they will continue to be long-term compounders.

Past performance is not a guarantee of future performance, but MFF's portfolio has delivered strong returns over the long-term.

According to CMC Invest, over the past five years MFF has delivered an average total shareholder return (TSR) of 16.2% per year.

I think its investment strategy can continue to perform well over the long-term and I expect its portfolio will continue to adjust over the years.

Dividend yield

One of the best reasons to like this ASX dividend share is down to its impressive dividend yield, which is superior to the ASX blue chip shares of CBA, BHP and Woolworths.

The business has provided guidance that it intends its next half-year dividend will be 12 cents per share and I expect the one after that will be 13 cents per share.

Assuming the business does pay an annual dividend per share of 25 cents per share in the 2027 financial year, it would represent a grossed-up dividend yield of 6.8%, including franking credits, at the time of writing.

Payout growth

Dividend growth is not a guarantee of course, but the business has a goal of increasing its dividend for investors each year and its large profit reserve and profit generation mean the business is able to pay consistently growing dividends.

In FY26 it grew its annual dividend per share by 23.5%, and I expect it will grow the dividend by another 19%. In my view, there are not many ASX dividend shares with yields above 6% that are likely to grow their payout at that pace.

MFF has grown its annual dividend per share each year since FY18, so it's building a pleasing track record of regular payout growth.

This ASX dividend share is one of the largest positions in my portfolio, and I'm expecting more pleasing payouts in the years to come.

The post Why I'd buy this top ASX dividend share for major passive income today appeared first on The Motley Fool Australia.

For people already getting $40,000 per year in passive income, I reckon receiving an additional $40,000 per year would also be very welcome.

So, what would it take to unlock that river of dividends via superannuation? That's what I'll look at in this article.

Superannuation could be the best place to invest for passive income these days following taxation changes to trusts, residential property and capital gains tax.

Owning dividend-paying investments in superannuation means investors won't lose as much of the return to tax as they would if the investment was in their own name. During the accumulation phase, superannuation has a lower tax rate for income than full-time working individuals, while in retirement the tax rate for income could be 0% for many retirees, depending on the size of their superannuation balance.

With that in mind, I think superannuation is an excellent place to unlock $40,000 per year.

Generating $40,000 of annual passive income

It'll take a sizeable sum to unlock tens of thousands of dollars of dividends each year.

There's no single dollar target required because it really depends on what sorts of investments Aussies choose and the dividend yield that comes with that.

For example, if an investor had all of their money in iShares S&P 500 ETF (ASX: IVV), you'd have a dividend yield of around 1%. With a dividend yield of 1%, someone would need a $4 million portfolio to make $40,000 per year in passive income.

The IVV ETF is not the choice I'd make for passive income, though it does have other benefits.

Instead, I'd focus on building a portfolio with a dividend yield of at least 4%, if not more.

With a 4% dividend yield, an investor could generate the desired passive income from a $1 million portfolio.

If an Australian's portfolio had a 5% dividend yield, they would only need $800,000 for that income.

With a 6.5% dividend yield, an Australian's portfolio goal would be close to $615,000.

As you can see, the higher the dividend yield, the smaller the portfolio needs to be to achieve the income target.

But, higher dividend yields may be riskier and/or deliver less capital growth for investors.

So, the choices investors make could greatly influence how reliable that passive income is. Not every investment with a high dividend yield may sustain its dividends over the longer term.

ASX dividend shares I'd consider for superannuation

If Australians are willing to accept a lower dividend yield, then it's hard to look past Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). That's an investment conglomerate that owns a diversified portfolio of defensive assets, enabling it to pay a reliable and growing dividend. Its payout has grown every year since 1998, though the grossed-up dividend yield is only 3.3%, including franking credits, at the time of writing.

But, there are plenty of businesses with higher dividend yields that I think are compelling.

For example, Centuria Industrial REIT (ASX: CIP) and Dexus Industria REIT (ASX: DXI) are both real estate investment trusts (REITs) with dividend yields of between 5% and 7%. They provide exposure to industrial property, which is benefiting from compelling rental tailwinds.

I also like portfolio investments that can provide diversification and good dividend yields for superannuation investors.

Some of my favourite portfolio-based investments that come to mind include MFF Capital Investments Ltd (ASX: MFF), WCM Quality Global Growth Fund (ASX: WCMQ), WCM Global Growth Ltd (ASX: WQG), Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG) and L1 Long Short Fund Ltd (ASX: LSF). All of these names have a track record of increasing payouts to shareholders, with dividend yields between 4% and 7%.

There are a number of other attractive ASX shares to consider, in my view, for passive income.

The post How much is needed in superannuation to target a $40,000 annual passive income? appeared first on The Motley Fool Australia.

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.

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.

The post I'd buy 36,519 shares of this ASX stock to aim for $1,000 a month of passive income appeared first on The Motley Fool Australia.

Dividend income is an excellent aspect of owning ASX shares, but tax is an obvious headwind for the return.

An Australian investor working full-time could lose a third (or more) of their passive income return to tax if they own those shares directly. Recently announced tax changes may also mean that investing in shares through trusts is not as compelling.

Therefore, superannuation could be the best place to invest for passive income and unlock significant cash flow.

Each household's taxation position is different, so I'm not going to mention tax again for the rest of this article.

How to make $2,000 of monthly passive income

Generating $2,000 per month, which equates to $24,000 per year, may not be enough to live an extravagant lifestyle. But, it could be a significant addition to other forms of income, such as interest or rental profits.

How large a portfolio needs to be to make $24,000 per year largely comes down to what the portfolio's average dividend yield is.

The higher the dividend yield, the smaller the portfolio can be to generate the same level of dividend income.

However, not all dividend yields are necessarily as reliable as others. I'd rather invest in a business that's likely to keep paying dividends than go for a huge dividend yield and see the payments disappear during an economic downturn.

If a portfolio had a dividend yield of 4%, the portfolio would need to be $600,000 in size to generate $24,000 of annual passive income.

A portfolio with a 5% dividend yield would require the portfolio to be $480,000 in size.

If the portfolio had a dividend yield of 6%, it would only need to be $400,000 in size.

What sorts of ASX shares I'd buy

There is a wide range of investment choices available for investors to choose from for passive income in superannuation.

Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) is a very compelling idea for income because its annual dividend has been hiked every year since 1998. However, its grossed-up dividend yield (including franking credits) is currently less than 4%.

In my view, many retiree investors could benefit from considering compelling listed investment companies (LICs) because their portfolios can provide diversification, and dividends can be smoothed for consistent payouts.

I think some of the leading LICs for passive income include WCM Global Growth Ltd (ASX: WQG), MFF Capital Investments Ltd (ASX: MFF), L1 Long Short Fund Ltd (ASX: LSF), WAM Microcap Ltd (ASX: WMI), WAM Leaders Ltd (ASX: WLE), Future Generation Australia Ltd (ASX: FGX) and Future Generation Global Ltd (ASX: FGG).

A few quality real estate investment trusts (REITs) also look significantly undervalued to me, such as Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Charter Hall Long WALE REIT (ASX: CLW) and Rural Funds Group (ASX: RFF).

The above ASX shares, among others, are top ideas for passive income in superannuation (or outside it).

The post How much is needed in superannuation to target a $2,000 monthly passive income? appeared first on The Motley Fool Australia.

The tax rate of investment earnings for individuals, trusts and companies may be higher than the tax rate of investment returns inside superannuation.

Another bonus of the super set-up is that, in most cases, we won't access the money for many years, promoting the idea of long-term investing inside superannuation. Investing for the long-term gives us the best chance that an investment will play out positively.

I'd say that receiving passive income is one of the best elements of owning shares. It requires virtually no additional effort to receive money into our bank account once we hold that investment.

Why is superannuation important for passive income? Less tax in super means losing less of the passive income return to tax.

Outside of super, a full-time working Australian could lose a third (or more) of the passive income return to tax, which makes that type of return less appealing.

Superannuation looks significantly more appealing, in my view, given how much lower the tax rate is during the asset accumulation phase of life when compared to a full-time individual's tax rate.

It could get even better in retirement, where a person's superannuation tax rate may be 0%. You can't get a tax rate lower than that!

Of course, every Australian's tax position is different, so we'll just look at the particular income goal from here and ignore the tax rates.

How much is needed in superannuation for $90,000 of annual passive income?

Being paid $90,000 in dividends each year sounds amazing to me. I'm a very long way from that goal, but I would like to reach that annual dividend target eventually.

Australians need to think about what sorts of investments they want to own and the dividend yield those investments provide.

I believe ASX shares are the best pick for passive income. That's partly because the franking credits attached to dividends from Australian companies are an excellent addition to the return.

What's actually required to earn $90,000 annually depends on the dividend yield of the portfolio.

For example, a portfolio with a 5% dividend yield would need to be $1.8 million in size, while a dividend yield of 7% would need to be $1.29 million in size.

The required portfolio size varies significantly in size, so it depends on the sorts of investments we make in our portfolio.

The types of ASX dividend shares I'd buy

There are a number of high-quality ASX dividend shares that Aussies can buy for yield, such as quality operating companies, listed investment companies (LICs) or real estate investment trusts (REITs).

In my view, Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) may be the strongest choice for reliable and rising dividends, but it has a relatively low dividend yield.

Some of the businesses I like with a dividend yield around 5% includes Telstra Group Ltd (ASX: TLS), APA Group (ASX: APA), Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), MFF Capital Investments Ltd (ASX: MFF) and L1 Long Short Fund Ltd (ASX: LSF).

My favourite ideas with an expected dividend yield of around 7% (or more) include WCM Global Growth Ltd (ASX: WQG), Future Generation Australia Ltd (ASX: FGX), Future Generation Global Ltd (ASX: FGG), Charter Hall Long WALE REIT (ASX: CLW), Dexus Industria REIT (ASX: DXI), WAM Microcap Ltd (ASX: WMI), WAM Leaders Ltd (ASX: WLE) and Hearts and Minds Investments Ltd (ASX: HM1).

These aren't the only compelling ASX dividend shares for superannuation investors to consider, but I think they're a great place to start.

The post How much is needed in superannuation to target a $90,000 annual passive income? appeared first on The Motley Fool Australia.

Sure, many of the income favourites on our market have decent dividend histories. But BHP Group Ltd (ASX: BHP)'s payouts, although often hefty, are hardly consistent. And the big banks tend to turn off the taps pretty quickly when the economy looks shaky. 2020 and 2021 are prime examples.

But MFF Capital Investments Ltd (ASX: MFF). Now that's a staircase.

MFF Capital is a listed investment company (LIC). That means it is a company that doesn't produce goods or services itself. Instead, it owns and manages an underlying portfolio of investments on behalf of its shareholders.

In MFF's case, this portfolio consists mostly of US stocks. These are selected and bought using the value investing principles that Warren Buffett originally championed. Portfolio manager Chris Mackay is a Buffett acolyte and loves buying high-quality companies at prices that make sense and holding them indefinitely.

Many of MFF's top holdings have been in its portfolio for years. They include Amazon, Mastercard, Alphabet, American Express, Home Depot, Visa, and Meta Platforms.

MFF uses the profits and dividends that it receives from these holdings to fund its own payouts.

One of the ASX's best dividend growth stocks?

The growth in said payouts has been extraordinary. MFF has gone from paying 1 cent per share in each semi-annual dividend back in 2017 to its latest half-year payout worth 10 cents per share. That payout, as with every dividend from this company, came with full franking credits attached.

This growth has been even more pronounced in recent years. Back in 2021, MFF doled out a total of 6.5 cents per share in fully-franked dividends. 2022 saw that upped to 7.5 cents per share, which grew again to 9.5 cents the following year. 2024 saw MFF dole out 13 cents per share in dividends, with 2025 seeing 17 cents per share distributed to investors.

In 2026, the company will hit an annual total of 21 cents per share if its guidance is to be believed. That's a compounded annual average growth rate of 26.5% over five years. Incredible stuff, and a beautiful staircase to appreciate.

No dividend share is perfect, and none can offer a guaranteed stream of income. However, as I discussed earlier this week, a company's dividend history is one of the crucial factors I use to decide if a company is worthy of investment. MFF passes this test easily, and with flying colours. That's why it's a core holding of my portfolio, and an ASX dividend stock I would recommend to any investor today.

The post This ASX dividend stock is growing its payouts like clockwork appeared first on The Motley Fool Australia.

One of the most appealing things about superannuation is that it has a lower tax rate than the company tax rate and the individual tax rate of a full-time worker. Superannuation may have a lower tax rate than trusts as well.

Another positive of investing through superannuation is its structure, which supports long-term investing. For people in the accumulation phase, they could make investments for decades before they can access that money.

The money available to use for passive income is the after-tax amount. This is why superannuation is so advantageous: less of the income is lost to tax compared to most tax brackets for individuals. I'd prefer not to lose a third of my passive income return to tax each year.

Not only is the tax rate lower in the accumulation phase of superannuation, but the tax rate could be as low as 0% in retirement, depending on the superannuation balance.

Of course, the taxation conditions for each household are different, so we'll just consider income goals from here.

How much is needed in superannuation for $12,000 of monthly passive income?

Receiving $12,000 in dividends each month amounts to an annual goal of $144,000. I'd love to receive that level of dividend income.

The question of how much money would need to be invested to generate that much income comes down to the investment's yield. But investors should consider more than just the yield – reliability and growth are also important aspects.

Plenty of ASX shares also attach franking credits to their dividends, boosting the after-tax dividend yield on offer.

Different portfolios can have different dividend yields. A portfolio with a 3.5% dividend yield would need to be double the size of a portfolio with a dividend yield of 7% to generate the same level of passive income.

For example, if a portfolio were $2.06 million in size, it would generate approximately $144,000 of annual passive income with a 7% dividend yield. If the portfolio had a 3.5% dividend yield, it would need to be $4.11 million in size to achieve the same level of annual payments.

Each dividend yield would require a different portfolio size to generate $144,000 annually. For example, a 5% dividend yield would require a $2.88 million portfolio and a 6% dividend yield would require a $2.4 million portfolio.

The types of ASX dividend shares I'd choose to buy

As I said before, if I'm investing for passive income in superannuation, I'd also want to take reliability and growth into account. I believe all of the businesses I'm about to name have better-than-average payout reliability.

If investors want to generate higher dividend yields, I'd look at reliable real estate investment trusts (REITs) and quality companies with franking credits, particularly listed investment companies (LICs).

Some of the businesses with a higher dividend yield I'd look at include MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG), WAM Microcap Ltd (ASX: WMI), Dexus Industria REIT (ASX: DXS), WAM Leaders Ltd (ASX: WLE), Charter Hall Long WALE REIT (ASX: CLW), WAM Microcap Ltd (ASX: WMI) and Universal Store Holdings Ltd (ASX: UNI).

Some of the businesses with a lower dividend yield, but deliver strong growth and/or reliability, include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Rural Funds Group (ASX: RFF), Centuria Industrial REIT (ASX: CIP), L1 Long Short Fund Ltd (ASX: LSF) and Telstra Group Ltd (ASX: TLS).

These aren't the only ASX shares I'd want to add into my passive income portfolio, though.

The post How much is needed in superannuation to target a $12,000 monthly passive income? appeared first on The Motley Fool Australia.

Once the tax changes kick in, superannuation may have a lower tax rate than what many individuals, trusts and companies experience.

Another benefit of superannuation is how effective it is for long-term investing. That's because we're typically not going to access that money for a very long time.

I love investing for passive income by owning shares. My money is working in the share market for me year-round and unlocking cash payments to my bank account.

Superannuation is important for this endeavour because of how we lose less of the income return to tax.

If a full-time working Australian receives passive income in their own name, they're likely to lose a third (or more) of the passive income to tax, significantly reducing the appeal of the passive income return.

In my view, superannuation can be the most appealing place to invest because of the better tax rate in the accumulation phase of life, compared to an individual's tax rate if they work full-time.

Impressively, an Australian's superannuation tax rate could be 0% in retirement, which is as good as it gets. 

Each Australian's tax rate is different, so I'll focus on targeting a specific income goal from here on, ignoring tax rates.  

How much is needed in superannuation for $80,000 of annual passive income?

Receiving $80,000 in dividends each year sounds good to me, although I'm certainly a long way from that goal. I hope I can reach that target in the future.

I think it's a wise idea for investors to think about what sorts of investments they want to own and the attached dividend yield that comes with that.

There are many different options for investors to consider, but I view ASX shares as the clear leader because of the appealing dividend yields and the fact that company payouts can come with franking credits.

The required portfolio size to reach $80,000 annually depends on the portfolio's dividend yield.

For example, if the portfolio had a 5% dividend yield, it would need to be $1.6 million in size. A 4% dividend yield would require a $2 million portfolio, and a 7% dividend yield would require a $1.15 million portfolio.

Every dividend yield requires a different portfolio size to reach the desired target. As a result, the ASX shares we choose play an essential part in the portfolio's dividend yield. 

Which ASX dividend shares I'd buy

Pleasingly, there are a number of ASX shares that can provide good dividend yields to retiree investors (and anyone else).

There are compelling companies, quality real estate investment trusts (REITs) and compelling listed investment companies (LICs).

Some of the businesses I like include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Telstra Group Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES), Lovisa Holdings Ltd (ASX: LOV), Propel Funeral Partners Ltd (ASX: PFP) and Universal Store Holdings Ltd (ASX: UNI).

Some of the fund-based investments that pay attractive dividends include MFF Capital Investments Ltd (ASX: MFF), WCM Quality Global Growth Fund (ASX: WCMQ), Future Generation Global Ltd (ASX: FGG) and Future Generation Australia Ltd (ASX: FGX).

In terms of property investments, I think some of the undervalued names with useful organic rental income growth are Rural Funds Group (ASX: RFF), Dexus Industria REIT (ASX: DXI), Centuria Industrial REIT (ASX: CIP) and Charter Hall Long WALE REIT (ASX: CLW).

The post How much is needed in superannuation to target a $80,000 annual passive income? appeared first on The Motley Fool Australia.

If you can invest wisely, it helps you build wealth for later on in life. And in the meantime, you benefit from low tax rates and long-term compounding.

But what can that passive income actually look like?

Let's break down how much you could earn every single year from a $600,000 superannuation balance.

What passive income can I earn off a $600,000 superannuation balance?

The easiest way to calculate your passive income is by multiplying your total superannuation balance by the overall dividend yield of your portfolio.

The tricky part is that the answer varies widely depending on what dividend yield you pick.

For example, $600,000 x 3% = $18,000 per year in dividend payments.

But if your portfolio has a slightly higher dividend yield of around 4%, your passive income will be higher. That's because $600,000 x 4% = $24,000 per year in dividend payments. 

Raise it again to 5%, and you could earn $30,0000 every year in dividend payments off the same superannuation balance ($600,000 x 5% = $ 30,000).

At a 6% yield, you could earn an annual passive income closer to $36,000 and at 7% that could be even higher, at around $42,000.

And so on… 

As your dividend yield increases, the passive income you can earn off your $600,000 superannuation balance also increases.  

These figures are based on cash dividends before any tax or franking credit benefits.

Which ASX shares should I invest my superannuation in if I want to earn $24,000 per year in passive income?

A 4% yielding portfolio of this size would earn around $24,000 per year in passive income. There are plenty of high-quality ASX shares around this level.

Some of my favourites include Telstra Group Ltd (ASX: TLS) and banking giants National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC). Cedar Woods Properties Ltd (ASX: CWP) and Mff Capital Investments (ASX: MFF) also yield around the 4% level at the time of writing.

And, which ASX shares will earn me $48,000 per year in passive income?

To earn $48,000 per year in passive income from a $600,000 superannuation balance, your portfolio will need to yield around 8%.

It's on the high side, and of course, the higher the yield, the more risk the portfolio carries. But it's still achievable.

If you're wanting to focus on high yield ASX shares I'd look at listed investment trusts (LIT)'s like the Metrics Master Income Trust (ASX: MXT) or the Metrics Income Opportunities Trust (ASX: MOT). These both target a return of 7-10%, and currently yield around 8%.

Exchange-traded funds are another good option for high yield investments. Such as the Betashares S&P Australian Shares High Yield ETF (ASX: HYLD) or the Global X S&P/ASX 200 Covered Call ETF (ASX: AYLD). These both yield in the 8-9% range at the time of writing.

The post How much passive income could I earn from a $600,000 superannuation balance? appeared first on The Motley Fool Australia.

Passive income from Australian companies can still come in the form of fully franked dividends, which provides a pleasing dividend yield.

In my view, the two below ideas are among the best in Australia, in my view.

MFF Capital Investments Ltd (ASX: MFF)

MFF has been one of the best-performing listed investment companies (LICs) over the past decade thanks to its focus on high-quality international shares.

Names like Visa, Mastercard, Alphabet and Amazon have helped it deliver great portfolio returns.

I like the ASX dividend share's investment flexibility giving it the ability to find the best opportunities anywhere with almost any sized business. While it does focus on global shares, L1 Group Ltd (ASX: L1G) – an ASX share – was one of its latest investments.

With those great returns, MFF has been growing its annual dividend at a compound annual growth rate (CAGR) of more than 20% in recent years.

I think there is a good chance the business will increase its payout by 19% in FY27 to 25 cents per share, translating into a potential grossed-up dividend yield of 6.8%, including franking credits. This could be one of the best ASX dividend shares to buy for passive income right now.

Centuria Industrial REIT (ASX: CIP)

This is a real estate investment trust (REIT) that provides investors exposure to industrial properties. I think the business can provide investors with a mixture of good passive income and capital growth.

The business is benefiting from strong demand thanks to e-commerce adoption, refrigerated space (for food and medicine), data centres, supply chain onshoring and more. All of that has led to a low vacancy rate and stronger-than-average rental growth.

In the FY26 half-year result, the business reported like-for-like net operating income (NOI) growth of 5.1%, with the portfolio being an average of 20% under-rented – this provides future earnings growth potential.

The business is regularly adding to its portfolio with both acquisitions and property developments, which helps increase its rental potential.

The fund manager of the ASX dividend share, Grant Nichols, said earlier this year:

CIP maintains significant earnings upside due to its strong, anticipated medium-term income growth resulting from material under-renting across the portfolio, expected improved portfolio occupancy, prudent completed capital management and the expected market rental growth stemming from Australia's favourable industrial market conditions. Improving tenant demand and constrained supply is expected to drive the national vacancy to less than 2.0% by 2030, providing a pathway to continued strong market rental growth.

Its FY26 annual distribution of 16.8 cents per security translates into a forward dividend yield of 5.6%. It's currently trading at a large discount to its net tangible assets (NTA) of $3.95.

The post 2 great ASX dividend share buys for passive income in August appeared first on The Motley Fool Australia.

One of the best things about superannuation is the fact that it has a lower tax rate than the individual tax rate and company tax rate. It may have a lower tax rate than trusts too.

Another advantage of superannuation investing is its structure, which promotes long-term investing. For people in the accumulation phase, they may make investments for decades before they can access that money.

When it comes to investing in passive income, the money we can use is the after tax amount. That's why it's more fruitful to invest for passive income in superannuation because less of the income is being lost to tax than most of the tax brackets for individuals. I'd prefer not to lose a third of my passive income to tax each year.

Pleasingly, not only is the tax rate lower in the superannuation accumulation phase, it could be as low as 0% in retirement, depending on the superannuation balance.

The taxation circumstances of each household is different, so we'll just look at the income goals from now on.

How much is needed in superannuation for $7,000 of monthly passive income?

Receiving $7,000 in dividends each month equates to an annual goal of $84,000 per year. I'd love to receive that level of dividend income.

The question of how much it would take to generate that much income comes down to the yield of the investment. Of course, there's more to investing than just the yield. Reliability and growth are also important factors.

Many ASX shares offer the great bonus of franking credits, boosting the dividend yield on offer.

I'll point out that a portfolio with an average dividend yield of 3% would need to be double the size of a portfolio with a dividend yield of 6% to generate the same level of passive income.

For example, if a portfolio were $1.4 million in size, it would generate $84,000 of annual passive income with a 6% dividend yield. If the portfolio had a 3% dividend yield, it would need to be $2.8 million in size to achieve the same level of annual payments.

Every dividend yield would require a different portfolio size to achieve $84,000 annually. For example, a 4% dividend yield would require a $2.1 million portfolio and a 5% dividend yield would require a $1.68 million portfolio.

The types of ASX dividend shares I'd choose to buy

As stated earlier, if I'm investing for passive income in superannuation, I'd also want to consider reliability and growth. I rate all the investments I'm about to highlight as above-average for payout reliability.

If investors want to unlock mid-to-higher dividend yields, I'd look at quality companies with franking credits, good value and reliable real estate investment trusts (REITs), and listed investment companies (LICs).

Some of the businesses with a dividend yield of between 5% to 7% that I'd look at include Telstra Group Ltd (ASX: TLS), WCM Global Growth Ltd (ASX: WQG), Centuria Industrial REIT (ASX: CIP), Dexus Industria REIT (ASX: DXI), Rural Funds Group (ASX: RFF), Charter Hall Long WALE REIT (ASX: CLW), MFF Capital Investments Ltd (ASX: MFF) and L1 Long Short Fund Ltd (ASX: LSF).

Then there's ASX dividend shares with a larger dividend yield. Some of my favourites with bigger yields include WAM Microcap Ltd (ASX: WMI), Future Generation Global Ltd (ASX: FGG), Future Generation Australia Ltd (ASX: FGX), WAM Leaders Ltd (ASX: WLE), Universal Store Holdings Ltd (ASX: UNI) and Hearts and Minds Investments Ltd (ASX: HM1).

The post How much is needed in superannuation to target a $7,000 monthly passive income? appeared first on The Motley Fool Australia.

I feel fortunate to be able to regularly invest money into the share market, and I recently put $3,000 to work into more stocks.

The three names I bought were: MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG) and L1 Long Short Fund Ltd (ASX: LSF).

All three of my new investments have similar positive attributes, which I'll get into below.

Effective investment strategies

All three of these ASX shares are listed investment companies (LICs). In other words, they invest in other shares and assets on behalf of shareholders.

They each have their own investment strategy, and they have all performed strongly over the long-term.

MFF aims for high-quality global shares with strong competitive advantages and an above-average ability to grow earnings.

The L1 LIC invests in a mixture of ASX shares and global shares that are priced cheaply with good earnings growth potential.

WCM Global Growth invests in businesses with improving competitive advantages and a corporate culture that supports that economic moat improvement.

Each of them have managed to deliver double-digit portfolio returns over the long-term, helping fund good dividends and a rising share price (thanks to their growing retained earnings).

Rising dividends

I believe the best ASX dividend shares can provide shareholders with consistent dividend growth.

It's good to be able to offset (or outpace) inflation. Rising dividends also allow us to feel wealthier, with more cash flowing through our bank accounts. The dividends can be reinvested or spent on our lives for essentials or to fund discretionary spending.

All three ASX shares I recently invested in – MFF, WCM Global Growth and L1 Long Short Fund – have all recently increased their dividends by more than 10% year-over-year.

It's not guaranteed that these businesses will continue to grow their dividends by more than 10% in the next financial year. It's possible they may not even grow the dividend. But, of all of the businesses on the ASX, these are three of the ASX shares I'm most confident will deliver a rising dividend to shareholders.

With their profit reserves and impressive investment returns, I believe they'll be able to continue hiking their payouts at a good pace for the next few years.

Good dividend yields

All three of these ASX shares have compelling dividend yields and could continue to grow their payouts from here, unlocking an even greater dividend yield in time.

I estimate that in FY27, the ASX shares could provide grossed-up dividend yields (including franking credits) of more than 5%. At the time of writing, MFF could offer a grossed-up dividend yield of 6.9%, WCM Global Growth could have a grossed-up dividend yield of 7% and L1 Global Short Fund could provide a grossed-up dividend yield of 5.1%.

I believe all of these stocks could outperform the S&P/ASX 200 Index (ASX: XJO) and deliver stronger dividend income. But, these aren't the only ASX shares I have my eyes on for July.

The post Why I just invested $3,000 in these 3 ASX shares appeared first on The Motley Fool Australia.

Pleasingly, superannuation has a lower tax rate than many individuals, trusts and companies. The way that superannuation works, and the nature of how we access the money, means it's very easy to invest for the long term inside the super system.

In my view, being paid passive income is one of the best elements of owning shares. Receiving money into our bank account every year for no effort sounds good to me.

How does superannuation play into passive income? Investors lose less of the passive income payments to tax.

Superannuation looks comparatively much more appealing because if a full-time working Aussie receives passive income in their own name, they could lose a third (or more) of that passive income to tax, significantly reducing the effectiveness of the passive income return.

In my opinion, superannuation is therefore a more appealing place to invest because of the lower tax rate in the accumulation phase of life, compared to an individual's tax rate if they're a full-time earner.

In retirement, a person's superannuation tax rate could be 0%. You can't get any better than that.

Of course, each Australia's tax position is different, so I'll just look at targeting a particular income goal from here and ignore the tax rates.

How much is needed in superannuation for $100,000 of annual passive income?

Receiving $100,000 in dividends each year sounds excellent to me. I'm definitely a long way from that target, but I'd love to receive that much in dividends each year.

Australians need to consider what types of investments they want to own and what size dividend yield comes with those investments.

I think ASX shares are the best choice for passive income. The attached franking credits are an excellent bonus.

How much is needed to earn $100,000 annually depends on the dividend yield of the portfolio.

For example, a portfolio with a 6% dividend yield would require $1.67 million. Meanwhile, a 4% dividend yield would require a $2.5 million portfolio.

As you can see, different dividend yields require different-sized portfolios to reach the target. Therefore, the numbers are heavily influenced by what ASX shares superannuation investors choose.

The types of ASX dividend shares I'd buy

There are various options on the ASX that can provide good yields to investors. Aussies could choose quality companies, real estate investment trusts (REITs) or listed investment companies (LICs).

Some of my favourite ideas for dividend growth and a solid starting yield include Wesfarmers Ltd (ASX: WES), Telstra Group Ltd (ASX: TLS), Universal Store Holdings Ltd (ASX: UNI), Lovisa Holdings Ltd (ASX: LOV), Medibank Private Ltd (ASX: MPL), Propel Funeral Partners Ltd (ASX: PFP) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL).

On the commercial property side of things, I like names such as Rural Funds Group (ASX: RFF), Dexus Industria REIT (ASX: DXI), Centuria Industrial REIT (ASX: CIP) and Charter Hall Long WALE REIT (ASX: CLW).

Finally, the LICs that I really like include MFF Capital Investments Ltd (ASX: MFF), L1 Long Short Fund Ltd (ASX: LSF), Future Generation Global Ltd (ASX: FGG) and Future Generation Australia Ltd (ASX: FGX).

These aren't the only attractive ASX dividend shares for superannuation investors, but I think they're an excellent starting point.

The post How much is needed in superannuation to target a $100,000 annual passive income? appeared first on The Motley Fool Australia.

I think some dividend yields can be too high if they're not going to be sustainable payouts for the long-term. I don't want to invest in things where the dividend payout is likely to decline in the coming years.

Of course, dividends are not guaranteed. But, some businesses are more likely to grow their payouts than others. Below are two I'm excited by.

Dexus Industria REIT (ASX: DXI)

This business is a real estate investment trust (REIT) that invests in industrial property across Australia. The industrial property sector has a low vacancy rate, which is a useful tailwind for rental growth, along with demand growth in areas like e-commerce adoption and data centres.

The ASX dividend share's FY26 payout comes to 16.6 cents per security, representing a distribution payout ratio of 95.4%. I think it's useful to see when a business is retaining some of its profit to invest in future opportunities.

The projected payout comes to a dividend yield of 6.8%. This business looks like a bargain to me because it's trading at a 28% discount to the net tangible assets (NTA) of $3.39 as of 31 December 2025.

The fund manager of the REIT, Jason Weate, said with the HY26 result:

While the industrial sector has continued to normalise, underlying supply-demand fundamentals are solid. Vacancy remains low across core industrial markets, with high land and construction costs putting pressure on pipelines. In the medium to long term, the sector will continue to be supported by a growing population and limited available supply.

In my view, this bodes well for the ASX dividend share's future payouts, particularly if the business can continue its solid mid-to-high single digit rental income growth.

MFF Capital Investments Ltd (ASX: MFF)

The other ASX share I want to highlight is this listed investment company (LIC), which aims to invest in high-quality international businesses with competitive advantages that enable them to grow earnings over the long term.

When a LIC generates strong investment returns over time, they can deliver pleasing and rising dividends for investors. MFF is invested in several of the best, strongest companies that enable the MFF portfolio as a whole to do well.

MFF has increased its regular annual dividend per share each year since FY18, so it has already given investors several years of consecutive dividend growth and it wants to continue that track record.

The business has increased its annual dividend per share by 4 cents in the last couple of financial years and I expect this trend to continue in FY27. That means its potential FY27 could be a grossed-up dividend yield of 6.9%, including franking credits, at the time of writing.

The post 2 ASX dividend shares with yields above 6% appeared first on The Motley Fool Australia.

Superannuation investors could have a low tax rate in the accumulation phase and perhaps a 0% tax rate in the retirement phase.

When the income is taxed so little, it means investors' after-tax income can be similar (or identical) to the before-tax income. It's the after-tax income figure that investors should focus on, in my view.

If superannuation investors are after passive income, I think the following ideas are very compelling with $5,000 (or more).

Centuria Industrial REIT (ASX: CIP)

This is a real estate investment trust (REIT) that owns a portfolio of industrial properties across the country. These buildings are located across high-demand areas where vacancy is low.

With tailwinds like e-commerce adoption, refrigerated space, and data centres driving increased demand for industrial demand, this is a strong tailwind for rental income and supporting distributions.

In the first half of FY26, the business reported like-for-like net operating income (NOI) growth of 5.1%, which I think is a solid rate of growth for a REIT. It also noted that its portfolio's rental income potential growth is strong, with an average under-renting of 20% of its real estate, suggesting a big rental increase when the contract comes up for renewal.

The business declared passive income of 16.8 cents per security in FY26, translating into a distribution yield of 5.6%. I think it's a good time to invest while interest rates are higher because that's a headwind for property values – this effect could reverse once interest rates start coming down again.

Plus, it's trading at a large double-digit discount to its net tangible assets (NTA), which was reported as $3.95 per unit as of 31 December 2025.

MFF Capital Investments Ltd (ASX: MFF)

Another ASX share that looks like an excellent passive income buy for superannuation is the listed investment company (LIC) MFF. LICs are a great investment structure because they enable the board to declare the size of dividends they want, allowing for consistent, growing dividends.

MFF has a stated intention to increase dividend payments to investors, which I believe makes it an appealing pick for investors seeking payout stability (and growth).

Companies pay for dividends from the profit they make. MFF generates income by generating investment returns from a portfolio of high-quality international shares with strong economic moats.

If you're going to invest in shares, why not own some of the best contenders that can deliver good compounding earnings, which is a key driver of shareholder returns?  Retained investment returns that aren't paid out as dividends can help drive the MFF share price higher over time as the underlying value of the business – measured by the NTA – grows.

MFF intends to pay an annual dividend per share of 21 cents for FY26, translating into a grossed-up dividend yield of 5.8%, including franking credits.

The post How to invest $5,000 for passive income in superannuation? appeared first on The Motley Fool Australia.

Pleasingly, superannuation has a lower tax rate than many individuals, trusts and companies. The nature of the superannuation structure means it's very easy to invest for the long term.

In my eyes, receiving passive income is one of the best parts of owning shares. It's really rewarding to receive passive income by owning ASX shares. Getting paid money into our bank accounts every year for no ongoing effort sounds good to me.

One of the major benefits of superannuation is that Australians lose less of the passive income return to tax. It's important to keep in mind that it's the after-tax passive income that investors should focus on.

If a full-time working Australian receives passive income in their name, they could lose a third (or more) of that dividend income to income tax, therefore making the passive income return less appealing.

These days, superannuation may well be the most appealing place to invest for passive income because of that lower tax rate in the accumulation phase of life, compared to the tax rate of an individual's tax rate as a full-time earner.

In retirement, an Australian's superannuation tax rate could be as low as 0%. An investor can't find a lower tax rate than that.

Of course, every household's taxation situation may be different, so I'll just talk about targeting a particular dividend goal and leave tax rates behind for the rest of the article.

How much is needed in superannuation for $70,000 of annual passive income?

Receiving $70,000 in dividends each year sounds really good to me. While I have a long way to go to reach that level of cash flow, it's something i'd love to achieve.

Australian superannuation investors need to think about what sort of investments they want to own and the size of the dividend yield that comes with that.

In my view, ASX shares are the best choice for passive income, partly due to the bonus of the attached franking credits.

Therefore, the required superannuation balance to earn $60,000 annually will depend on the dividend yield of the portfolio.

For example, a portfolio with a 5% dividend would require $1.4 million, a 4% dividend yield would require a $1.75 million portfolio and a 7% dividend would require a $1 million portfolio.

It really depends on which ASX shares investors choose.

The types of ASX dividend shares I'd buy

There are plenty of compelling ideas on the ASX that can deliver good dividend yields.

For example, there are discounted real estate investment trusts (REITs), excellent listed investment companies (LICs) and great operating companies.

Some of the names I'd look at with low-to-medium dividend yields but good growth and/or stability include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Wesfarmers Ltd (ASX: WES), Lovisa Holdings Ltd (ASX: LOV), Centuria Industrial REIT (ASX: CIP), L1 Long Short Fund Ltd (ASX: LSF) and APA Group (ASX: APA).

Investments with a higher dividend yield include names like  MFF Capital Investments Ltd (ASX: MFF), WCM Global Growth Ltd (ASX: WQG), Future Generation Global Ltd (ASX: FGG), Dexus Industria REIT (ASX: DXI), Telstra Group Ltd (ASX: TLS) and Charter Hall Long WALE REIT (ASX: CLW).

The post How much is needed in superannuation to target a $70,000 annual passive income? appeared first on The Motley Fool Australia.

I prefer the idea of owning great businesses that can provide a pleasing level of passive income, including payout growth that's faster than inflation. 

MFF Capital Investments Ltd (ASX: MFF) is one of the ASX dividend stocks I'd be happy to rely on, but it's not the only one. I suggest it's a good idea to have a diversified portfolio when it comes to passive income.

There are a few elements that make MFF Capital such a compelling option. 

High-yield ASX dividend stock

One of the most appealing aspects of the business is that it offers a very pleasing dividend yield.

The business expects to pay an annual dividend per share of 21 cents in the 2026 financial year. That translates into a current grossed-up dividend yield of approximately 6%, including franking credits. That's better than most/all term deposits out there right now. Plus, it offers payout growth potential. 

Rising payout

MFF has an impressive record of dividend growth for shareholders. For me, this is one of the most important reasons I prefer the ASX dividend stock compared to the Age Pension.

The business has increased its regular annual payout every year since FY18. In FY25, it increased its annual dividend per share by 4 cents. In FY26, it expects to increase its payout by another 4 cents per share to 21 cents per share.

I think there's a good chance the business will increase its annual payout by another 4 cents per share in FY27. If it does this, it would represent year-over-year growth of 19% and a grossed-up dividend yield of around 7%, including franking credits. That'd be a huge, attractive yield in my view, with likely growth in subsequent years due to its large profit reserve. 

Great investments

Virtually all of MFF's value is related to its investment portfolio because it's best-known as a listed investment company (LIC). 

It aims to build lasting wealth for shareholders through ownership of a portfolio of "advantaged businesses", which are typically global companies. 

Some of its largest holdings include names like Alphabet, Amazon, Mastercard, Visa, Bank of America, Meta Platforms, American Express, and Microsoft.

As a LIC, it has a flexible investment mandate to pursue opportunities worldwide, enabling it to search far and wide for ideas. I think this is very useful to help it produce great returns over time. It can sell and buy shares as it sees opportunities change.

How many MFF Capital shares would it take to match the Age Pension?

Currently, the maximum Age Pension for a single person is approximately $31,200 annually.

To receive that much from MFF Capital, an investor would need 148,572 shares, though I expect the FY27 payout will be larger, so fewer shares would be needed for the next financial year.

I suggest having more than just one high-yield ASX dividend stock in a portfolio, but MFF Capital could certainly be a great holding, in my opinion. 

The post 148,572 shares of this high-yield ASX dividend stock pays an income equal to the Age Pension appeared first on The Motley Fool Australia.