There are a few names in my portfolio I’ve significantly invested in for passive income and long-term growth. One of those is L1 Long Short Fund Ltd (ASX: LSF), a listed investment company (LIC) that offers numerous positives as a reliable ASX dividend stock.
It’s operated by investment manager L1 Group Ltd (ASX: L1G), with the team investing in a quite different style to the local or global share markets.
The LIC is already more than $2.5 billion in size, and I believe it has a very positive future ahead for multiple reasons.
Diversification
The ASX dividend stock’s investment strategy is to invest in both ASX-listed and global shares, providing the business with significant diversification. It’s great to look across numerous companies that could be the best investment opportunities.
Additionally, I like that the business can short-sell overvalued shares, if it wants to. That way, it can generate returns in a variety of ways, including when markets are falling.
Typically, L1 Long Short Fund likes to invest in businesses with growing earnings and a low price-earnings (P/E) ratio. That’s why the investment team regularly look at cyclical sectors when there is pessimism in the air, which can be a particularly effective time to invest.
The L1 Long Short Fund has delivered an average return per year of 17.6% over the three years to 30 April 2026. That’s enough for the ASX dividend stock to deliver capital growth and good long-term dividends.
Reliable ASX dividend stock
The business has increased its dividend in every period since the company declared its first dividend of 1.5 cents per share in February 2021.
In FY26, the current financial year, the ASX dividend stock began paying quarterly dividends and recently announced its latest quarterly dividend of 3.7 cents per share. Each FY26 quarter has seen another increase. It expects the dividend to continue increasing.
I expect the next four quarterly dividends to be paid could come to approximately 15.4 cents per share, which would translate into a grossed-up dividend yield of 5.25%, including franking credits.
Given how effectively the investment portfolio has performed, the LIC has grown its dividend per share at a double-digit percentage rate, which is a pleasing compounding rate. I expect the business will continue to increase its dividend in the coming years.
How much could $1,000 buy?
If an investor were to put $1,000 into L1 Long Short Fund shares, they’d be able to buy 238 shares at the time of writing.
I’d be very happy to invest in the ASX dividend stock for the long term.
The post $1,000 buys 238 shares in an incredibly reliable ASX dividend stock appeared first on The Motley Fool Australia.
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More reading
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- Why this ASX dividend share is a retiree’s dream
- Create a river of dividends for passive income alongside work earnings with ASX stocks
Motley Fool contributor Tristan Harrison has positions in L1 Long Short Fund. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.