I’d buy this ASX dividend stock in any market

There’s a certain group of ASX dividend stocks that I’d be willing to buy in any market environment, whether the economy is booming or challenging.

A resilient business can continue growing its operating earnings, and a defensive ASX dividend stock is capable of continuing to deliver passive income to investors.

I’d be very happy to buy Rural Funds Group (ASX: RFF) shares right now and virtually any time.

Pleasing yield

Most income investors are probably looking for a strong dividend yield, so let’s take a look at how big the passive income could be in FY26.

Rural Funds owns a portfolio of farmland across Australia, which generates an attractive level of rental income. The business is able to use the rental profits to pay distributions to investors every quarter.

The business expects to pay a distribution of 11.73 cents per unit in the 2026 financial year. This translates into a forward distribution yield of approximately 6%, at the time of writing.

While that’s not the biggest yield on the ASX, it’s more than a term deposit, and there’s potential growth of payouts in the future.

Rising operating earnings for the ASX dividend stock

The leases that ASX dividend stocks have signed with tenants have rental growth built in, with those increases either linked to inflation or fixed annual rises.

While that rental growth is not rapid, it provides investors with positive tailwinds for rental earnings to grow.

Rural Funds is also able to put money towards increasing the rental potential of its land, whether that’s through improving the productivity of the land or changing the type of agriculture produced on that land (such as the Maryborough and Riverton farms being used for macadamia plantings).

With a weighted average lease expiry (WALE) of 13.9 years, the business has rental income locked in for the long term.

It’s expecting to grow its adjusted funds from operations (AFFO) – the net rental profit – by another 1.7% in FY26, and I’m expecting that growth rate to increase in the coming years as the ASX dividend stock’s investments are completed.  

Large NAV discount

I think it’s appealing to buy an asset-focused business like a real estate investment trust (REIT) when it’s trading at a cheaper price compared to its underlying value.

Every six months, Rural Funds tells the market what its adjusted net asset value (NAV) is. It’s adjusted to take into account the market value of the water rights that it owns.

At 30 June 2025, the business reported an adjusted NAV of $3.08. At the time of writing, it’s trading at a discount of 36%, which I think is very appealing and makes today a good time to buy.

The post I’d buy this ASX dividend stock in any market appeared first on The Motley Fool Australia.

More reading

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• Analysts have rated these ASX shares a ‘strong buy’. Here’s what I think.
• 3 ASX dividend shares to boost your passive income in 2026

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