Stock Pick

$1,000 buys 584 shares in an incredibly reliable ASX dividend stock

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$100 Australian notes on top of each other.

There are very few ASX dividend stocks I’d view as a more reliable option for passive income than Future Generation Global Ltd (ASX: FGG).

When I think about which businesses I’d want to own for dividends, I’d want to choose names that can provide both a good dividend yield and a rising payout.

If an investor wants passive income, then they’ll probably be looking for a good yield upfront. But, growth of the payout is also important to help offset inflation and hopefully provide steadily rising dividends to make our bank accounts increasingly well-off.

Future Generation Global is a listed investment company (LIC) that offers numerous positives. Let’s look at the positives and why I’d buy it with $1,000 (or more).

Philanthropic efforts

The business is not like many other ASX dividend stocks. It’s a LIC which provides investors exposure to a portfolio of funds of different fund managers.

All of those fund managers work for free so that Future Generation Global can donate 1% of its net assets each year to charities focused on youth mental health.

Some of the charities that are supported by Future Generation Global include BackTrack, Bighart, Life4Life, Mind Blank, Prevention United, Project Rockit, Reachout, Smiling Mind and Youth Opportunities.

I think it’s a really great set-up for both investors and the charity contributions.

Diversification

Future Generation Global can provide investors with excellent diversification because it’s invested in the funds of 15 different fund managers.

There are more than 3,700 different underlying shares in the ASX dividend stock’s portfolio, so Future Generation Global actually offers enormous diversification across North America, the UK, Europe, Asia and so on.

Its money is spread across a number of fund managers including Antipodes, Yarra Capital Management, Munro, WCM Investment Management, GCQ, Ellerston Capital, Vinva, Langdon, Plato and Paradice.

Dividend yield

The ASX dividend stock recently announced its FY26 interim dividend for shareholders – 4.2 cents per share and provided guidance that the final dividend per share for FY26 will be another 4.2 cents per share.

That brings the potential FY26 annual payout to 8.4 cents per share. At the current Future Generation Global share price, that translates into a possible grossed-up dividend yield of 7%, including franking credits, at the time of writing.

That would generate around $70 of grossed-up dividend income with a $1,000 investment for FY26 by buying 584 shares.

That’s more appealing to me than a term deposit, particularly when it’s combined with its rising dividend.

Rising payouts

Future Generation Global has increased its annual payout each year since FY19, so investors have already had several years of dividend growth. It also has a profit reserve of 66.4 cents per share, which suggests it can fund close to eight years of dividends based on the FY26 dividend level.

Pleasingly, the guidance the business has provided for FY26 translates into year-over-year growth of 5%. That’s a solid rate of growth, in my opinion.

But, it’s not the only ASX share I’d buy with $1,000. There are a few other compelling opportunities.

The post $1,000 buys 584 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 Global. 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.

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