$4,000 buys 3,065 shares in an impressively reliable ASX dividend stock

The ASX dividend stock Future Generation Australia Ltd (ASX: FGX) is one of my favourite ideas as a high-yield passive income option. On top of that, it’s providing growing dividend payments too. I think it’s a true dividend winner.

Future Generation Australia is a listed investment company (LIC) that invests quite differently from many other LICs.

A typical LIC will usually invest in a portfolio of ASX shares or international shares. This ASX dividend stock operates in a way that adds significant diversification and lower volatility.

Significant diversification

Future Generation Australia invests with a fund-of-funds strategy. It’s invested in the funds of 16 different fund managers, including L1 Group Ltd (ASX: L1G), Vinva, Firetrail, Smallco, Eley Griffiths, and TenCap.

By investing in these funds, the ASX dividend stock’s portfolio is less concentrated on the largest businesses on the ASX than the weightings of the S&P/ASX 300 Index (ASX: XKO).

In other words, Future Generation Australia is much more focused on smaller, faster-growing businesses that could help provide better returns over time.

Additionally, these fund managers don’t charge any management fees to Future Generation Australia for a special reason.

Philanthropic nature

All of the fund managers involved work on a pro bono basis so that the ASX dividend stock can donate 1% of its net assets to charities focused on young Australians.

Some of the current recipients of donations include Australian Children’s Music Foundation, Lighthouse, Mirabel Foundation, Giant Steps, and Raise.

Since inception, Future Generation Australia has donated $54.9 million and each year that figure becomes larger. The LIC is making an important contribution to Australia’s next generation, and I’m glad I’m a shareholder.

Great dividends

There are two reasons why I think this LIC is so appealing for dividends.

First, it offers a very compelling dividend yield. It has provided guidance that it will pay an annual dividend per share of 7.6 cents in FY26.

At the time of writing, that translates into a grossed-up dividend yield of 8.3%, including franking credits.

The second reason to really like the business is that its dividend is consistently growing. It has grown every year since 2015, providing more than a decade of consistent payout increases.

It expects to hike its annual dividend by 5.6% for FY26, which would mean the dividend will have grown by 90% since 2015.

$4,000 investment in the ASX dividend stock

I think now is a good time to invest with the FY26 half-year dividend to go ex-dividend (and be paid) in November.

At the time of writing, an investor can buy 3,065 Future Generation Australia shares with a $4,000 investment, which I think is a solid investment choice.

But it’s not the only ASX share I’d buy for returns right now.

The post $4,000 buys 3,065 shares in an impressively reliable ASX dividend stock appeared first on The Motley Fool Australia.

More reading

• How much do I need to retire on $85,000 a year at 50?
• 2 ASX shares with dividend yields above 8%
• How much do I need to retire on $75,000 a year at 45?
• $3,000 buys 2,325 shares in an impressively reliable ASX dividend stock
• 2 ASX passive income share ideas I’d use to generate $200 a month in 2027

Motley Fool contributor Tristan Harrison has positions in Future Generation Australia and L1 Group. 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.