75% of my dividends come from these 4 ASX shares (and I want to buy more)

I’ve chosen a few ASX shares to be key sources of dividend income from my portfolio. There are four names that currently account for around 75% of the passive income I receive.

I’m a big fan of dividend income because I can use that cash flow in my own life to pay for discretionary spending or essentials. It’d be great if, one day in the future, my total dividends could cover my mortgage payment. I’m not there yet, though.

Australians can receive an elevated level of dividend income from their ASX investments thanks to the benefit of franking credits. These are refundable tax credits that can reduce the tax owed or increase the tax refund for individuals.  

I don’t pick an investment just because of franking credits. I’ll mention that I’m also a fan of exchange-traded funds (ETFs) and real estate investment trusts (REITs) that don’t attach franking credits to their payments.

There are a few factors that I do look for when considering ASX dividend shares.

I want to see that the investment has a compelling outlook to increase its underlying value over time, whether that’s earnings growth, rental profit growth or growth in its net tangible assets (NTA) per share.

I like to see a track record of dividend growth because it shows reliability and the board’s commitment to paying shareholders passive income during uncertain economic times.

I’d also like to see a solid starting dividend yield. If I’m investing for passive income, I want to see a good level of dividends in the first year of ownership and growth from there. But I’m wary of investments that pay huge yields because that could be unsustainable.

With those goals in mind, let’s run through which ASX dividend shares I’m confident will continue to play a huge role in my household’s cash flow. I’ll go through them in alphabetical order.

L1 Long Short Fund Ltd (ASX: LSF)

This first ASX dividend share is a listed investment company (LIC). I like the LIC structure because it can provide a winning combination of diversified investment exposure, growing dividends, a good dividend yield and capital growth, as long as the portfolio performs.

There are a variety of LICs that follow different investment strategies. I like the L1 Group Ltd (ASX: L1G) strategy of avoiding what the investing crowd is chasing. Growing businesses with low price/earnings (P/E) ratios can deliver strong returns if bought at the right time.

L1 Long Short Fund looks at both ASX shares and international shares for investment opportunities, using both ‘long’ investing and short selling to find stocks that could deliver returns.

I like how it’s willing to look beyond the tech and banking sectors, which dominate the global and ASX markets, respectively. Its three most fruitful sectors for returns have been materials, industrials and communication services.

Past performance is not a guarantee of future performance, but its portfolio has produced an average return of 15% per year in the last five years and 20.4% per year in the last seven years. That shows it can perform strongly by picking stocks some investors may avoid.

It started paying a dividend in 2021 and has increased the payout each financial year since. If it continues the same progressive dividend policy, its next quarterly dividend is likely to be 11.4% higher than the quarterly payment 12 months prior. I’d say that’s a solid growth rate.

I expect the next 12 months of dividends will total at least 16.2 cents per share, which translates into a grossed-up dividend yield of 5.25%, including franking credits, at the time of writing.

MFF Capital Investments Ltd (ASX: MFF)

This second ASX dividend share is another LIC.

It targets a portfolio of high-quality shares that have strong competitive advantages and an above-average outlook for profit growth.

MFF is willing to invest anywhere in the world if it finds an opportunity. Its portfolio includes some of the strongest businesses in the international stock market, including several leading US tech giants, among other names.

Over time, the shares in the portfolio may change, but I expect the LIC’s holdings will collectively continue to deliver pleasing results (with both profit growth and capital growth).

It has grown its annual regular dividend nine years in a row and it has provided dividend guidance that suggests it will reach a decade of continuous growth. MFF expects to pay a half-year dividend of 12 cents per share and I expect the full-year dividend will be 25 cents per share.

At the time of writing, that potential payout translates into a grossed-up dividend yield of 7%, including franking credits, at the time of writing.

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

I’ve held this ASX dividend share longer in my portfolio than any other stock. It’s an investment house that has operated for more than 120 years.

The business has built an impressive and diversified portfolio of assets that are largely defensive and generate resilient cash flow. It’s invested across areas such as energy, swimming schools, telecommunications, agriculture, real estate, building products, electrification, financial services, credit, fixed income and more.

Its defensive and growing cash flow has allowed Soul Patts to increase its annual dividend every year since 1998, which is the best record on the ASX for consistent dividend growth.

The company has also delivered shareholders some sort of dividend every year since its listing in 1903, including through the world wars and major economic declines.

Soul Patts doesn’t pay out all of its cash profit each year – it’s currently retaining approximately a quarter of its cash earnings to re-invest in more opportunities and grow the portfolio value.

Its FY26 payout translates into a grossed-up dividend yield of 3.4%, including franking credits, at the time of writing.

WCM Global Growth Ltd (ASX: WQG)

The final ASX dividend share I want to highlight is another LIC, which is managed by fund manager WCM. WCM is based in Laguna Beach, California, a deliberate choice to be far from Wall Street culture in New York.

WCM Global wants to find quality global stocks. Its portfolio is spread across the world, mostly in the Americas, Europe and Asia Pacific – I like the diversification that can provide our portfolios.

There are two features that WCM wants to see from its stock picks.

It wants to find businesses with a widening economic moat (improving competitive advantages, measured by a strengthening return on invested capital (ROIC)).

WCM also wants to see evidence that the business has a corporate culture that supports the strengthening of the economic moat, which is an essential ingredient for long-term success.

The ASX dividend share has increased its payout every financial year since FY19, and it’s now increasing the payout each quarter. The next year’s dividend is guided to be 10.1 cents per share, which translates into a grossed-up dividend yield of 7.3%, including franking credits, at the time of writing.

I think all four of these stocks have a very promising future for dividend growth and total returns. I’d be very happy to buy shares today, and I plan to buy more in the coming weeks and months. I’ve also got my eyes on a few other investments.

The post 75% of my dividends come from these 4 ASX shares (and I want to buy more) appeared first on The Motley Fool Australia.

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• CBA vs Soul Patts: Which ASX share wins in 2026?
• How much is needed in superannuation to target a $100,000 annual passive income?

Motley Fool contributor Tristan Harrison has positions in L1 Group, L1 Long Short Fund, Mff Capital Investments, Washington H. Soul Pattinson and Company Limited, and Wcm Global Growth. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia has positions in and has recommended Mff Capital Investments and Washington H. Soul Pattinson and Company Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.