$1,000 buys 735 shares in an incredibly reliable ASX dividend stock

In my view, Future Generation Australia Ltd (ASX: FGX) is one of the most reliable ASX dividend stocks available to Aussies.

It may not be as famous as Commonwealth Bank of Australia (ASX: CBA) or BHP Group Ltd (ASX: BHP), but I think it’s a better pick for both reliability and dividend yield.

Future Generation Australia is a listed investment company (LIC) with a big difference. Instead of a typical arrangement where investors pay management fees to a fund manager, this LIC charges no fees (including no performance fees). Instead, it donates 1% of net assets each year to youth-focused charities.

The LIC is invested in the funds of 16 different fund managers, giving it excellent diversification. Future Generation Australia gives exposure to more than 430 underlying shares across different sectors, meaning it’s significantly more diversified than the S&P/ASX 200 Index (ASX: XJO)

It also gives access to variety of companies across different market capitalisations – at the end of May, more than 19% of the portfolio came from outside the S&P/ASX 300 Index (ASX: XKO).

Let’s get into what makes it such an appealing choice for dividends.

Reliability

Both CBA and BHP have given their shareholders dividend cuts this decade, so they haven’t been very reliable, despite having reputations as Australia’s biggest and bluest of ASX blue-chip shares.

As a LIC, Future Generation Australia is capable of smoothing out its dividends because it can build up its profit reserve with investment gains during positive years, allowing it to pay a rising dividend even in more difficult years.

It has increased its annual dividend per share each year since 2015 – that’s more than a decade of consistent dividend growth.

The ASX dividend stock has built up a profit reserve of 41.8 cents per share as of May 2026 – it could keep funding the same size dividend for more than five years.

Dividend yield

Future Generation Australia is attractive not just for its reliability but also for its strong dividend yield.

In 2025, the business paid an annual dividend per share of 7.2 cents. That translates into a grossed-up dividend yield of 7.6%, including franking credits.

But, I’m expecting the business to hike its payout in 2026 to 7.4 cents per share, which would equate to a grossed-up dividend yield of 7.8%, including franking credits.

It’s hard to find another ASX dividend stock that offers a good a dividend yield as that, and has increased the dividend for as many years in a row.

Is this a good time to invest?

We can already see that the business offers compelling dividend income.

The business is trading fairly closely to its net tangible assets (NTA) – I’d prefer to buy when it’s trading at a discount, but today’s price is still solid, in my view.

With $1,000, an investor could buy 735 shares of this appealing LIC. Plus, it’s providing a great philanthropic service.

The post $1,000 buys 735 shares in an incredibly reliable ASX dividend stock appeared first on The Motley Fool Australia.

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Motley Fool contributor Tristan Harrison has positions in Future Generation Australia. 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 recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.