While the Australian Age Pension is one of the most generous in the world, I’d rather rely on quality, high-yield ASX dividend stocks.

I enjoy owning businesses that are able to provide a good level of passive income and payout growth over time.

Australian Foundation Investment Co Ltd (ASX: AFI) is one of the ASX dividend stocks I’d be comfortable relying on, though it wouldn’t be the only one. I believe it’s important to have a diversified portfolio when it comes to dividends.

There are a few aspects that make the listed investment company (LIC) an appealing option.

Diversification

If I had to rely on an ASX dividend stock to continue paying passive income across all economic conditions, I’d pick an investment with the ability to pay resilient passive income.

Some older Australians who may have relied on dividend income from large ASX bank shares and ASX mining shares may already have seen their payouts cut this decade. At the start of the 2020s, we saw COVID-19 impact bank payouts. Iron ore price volatility has led miners to reduce their payouts.

The AFIC business model is about giving investors exposure to a portfolio of ASX blue-chip shares, allowing the LIC can provide investors with a mixture of passive income and long-term capital growth.

Some of the positions in the portfolio include BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Transurban Group (ASX: TCL).

But, it owns plenty of other ASX shares in the portfolio too.

High-yield ASX dividend stock

One of the most appealing aspects of Australian Foundation Investment Co is the pleasing level of passive income it can provide to our bank accounts.

The business has been very consistent with its payout this century, giving investors a high level of income security.

AFIC recently announced that it intends to declare a final dividend of 14.5 cents per share, as well as a special dividend of 2.5 cents per share.

That means its regular dividend for FY26 equates to a grossed-up dividend yield of 5.5%, including franking credits, at the time of writing. Including special dividends, its payout translates into a grossed-up dividend yield of 6.5%, including franking credits.

While the company’s regular annual dividend isn’t increased every single year, it has increased regularly since FY22.

Low costs

The LIC has one of the lowest costs in the country when it comes to the annual management costs. That’s important because it significantly helps the net return of the portfolio.

The high-yield ASX dividend stock has an annual management fee of 0.16%, which means most of the returns are staying in the hands of investors rather than being lost to management fees or performance fees.

With a solid long-term portfolio net return, the business has built an excellent profit reserve, enabling the business to continue paying good dividends in the long-term.

How many AFIC shares would it take to match the Age Pension?

Right now, the maximum Age Pension for a single person is approximately $31,200 annually.

To receive $31,200 annually from AFIC (excluding special dividends), an investor would need 117,736 Australian Foundation Investment Co shares based on the expected FY26 payout excluding the franking credits and 82,416 AFIC shares including the franking credits.

I’d suggest Australian investors should have more than just one high-yield ASX dividend stock in a portfolio, though AFIC would be an effective inclusion, in my opinion.

The post 117,736 shares of this high-yield ASX dividend stock pays an income equal to the Age Pension appeared first on The Motley Fool Australia.

More reading

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group, Transurban Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool Australia has recommended BHP Group, Macquarie Group, and Wesfarmers. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Ioneer Ltd (ASX: INR) shares have been strong performers over the past 12 months.

During this time, the ASX lithium share has risen a sizeable 45%.

But if you thought the gains were over, think again! 

Why this ASX lithium share could keep rising

Bell Potter was pleased to see the lithium developer announce agreements with the Korea Overseas Infrastructure & Urban Development Corporation (KIND) and Hyundai Engineering. The broker believes it is a testament to the quality of the company’s Rhyolite Ridge project. It said:

While the engagement remains non-binding, the calibre of and the commentary from these counterparties provides a strong endorsement of INR’s Rhyolite Ridge project development pathway. The MOUs are clearly part of INR’s Strategic Partnering Process to introduce new project-level equity funding in support of a Final Investment Decision. 

Rhyolite Ridge is fully permitted; an October 2025 project economic update outlined potential production of 27.8ktpa lithium hydroxide and 135.5ktpa boric acid at a capital cost of US$1.7b and with a lithium AISC of US$4,628/t LCE (net of boron coproduct credits). The project is also backed by a US$996m US Department of Energy concessional loan. With cash of US$62m (31 March 2026), INR is fully funded to FID.

Big potential returns

In response to the news, Bell Potter has retained its speculative buy rating and 40 cents price target on the ASX lithium share.

Based on its current share price of 14.5 cents, this implies potential upside of 175% for investors over the next 12 months.

Commenting on its investment thesis, Bell Potter said:

Rhyolite Ridge is strategically important as a fully permitted, near-term and USlocated source of lithium and boron supply. Both lithium and boron are USGS-designated critical minerals. Rhyolite Ridge received development approval in October 2024 and engineering design is 70% complete. Lithium markets have recently strengthened, and we expect that continued growth in underlying demand and limited new sources of supply will support lithium chemicals prices over the medium to long term. Our INR valuation is $0.40/sh. 

Key INR value catalysts are the outcomes of the Strategic Partnering Process in the lead-up to a Final Investment Decision and commencement of development, all expected in 2H 2026. INR is an asset development company with forecast cash flows only; our Speculative risk rating recognises this higher level of investment risk and share price volatility.

The post Why this red hot ASX lithium share could rise 175% appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

Building a portfolio for retirement income isn’t just about finding the highest dividend yields. The goal is to create a reliable stream of income that can continue growing over time, while also preserving capital through different market cycles.

That’s why I prefer a mix of high-quality companies and diversified exchange-traded funds (ETFs). Together, they can provide exposure to different sectors, geographies and income sources, reducing the reliance on any single investment.

If I were building a portfolio for retirement income today, these five ASX investments would be at the top of my list.

BHP Group Ltd (ASX: BHP)

When it comes to retirement income, BHP offers something few companies can match: ownership of some of the world’s lowest-cost mining assets.

The mining giant generates enormous cash flows from iron ore, copper and metallurgical coal, allowing it to return significant amounts of capital to shareholders through dividends over the long term.

While earnings and dividends will naturally fluctuate with commodity prices, BHP’s strong balance sheet, operational scale and diversified resource base make it one of the most dependable dividend payers on the ASX.

The growing importance of copper in electrification and renewable energy also provides an attractive long-term growth opportunity alongside its income appeal.

Commonwealth Bank of Australia (ASX: CBA)

No retirement income portfolio feels complete without exposure to Australia’s biggest bank.

Commonwealth Bank has built an enviable record of generating consistent profits through economic cycles, supported by its dominant position in home lending, deposits and business banking.

Although the shares rarely look cheap, investors aren’t simply paying for today’s earnings. They’re buying a business with outstanding profitability, a powerful brand and a history of delivering fully franked dividends.

For retirees seeking dependable income, CBA continues to earn its place.

Transurban Group Ltd (ASX: TCL)

Infrastructure can add another layer of stability to retirement income, and that’s exactly where Transurban shines.

The company owns and operates many of Australia’s busiest toll roads, generating recurring cash flows from assets that are extremely difficult to replicate. As cities continue growing and traffic volumes increase over time, Transurban benefits from both rising usage and inflation-linked toll increases across many of its concessions.

That combination has supported a long history of attractive distributions.

Vanguard Australian Shares High Yield ETF (ASX: VHY)

No single company should determine the success of a retirement income portfolio. That’s why I’d include the Vanguard Australian Shares High Yield ETF.

VHY provides exposure to dozens of Australia’s highest-yielding dividend-paying companies across sectors including banking, resources, healthcare, telecommunications and consumer staples. Instead of relying on one dividend stream, investors receive income from a broad collection of established Australian businesses.

That diversification helps smooth income over time while reducing stock-specific risk.

Vanguard MSCI Index International Shares ETF (ASX: VGS)

While VGS isn’t known for delivering a high dividend yield, I still believe it plays an important role in generating retirement income.

The ETF invests in hundreds of leading companies across developed markets, including many of the world’s largest technology, healthcare and consumer businesses. Those companies may pay lower dividends today, but they also offer significant earnings and capital growth potential.

Over a long retirement, that growth can help offset inflation, increase portfolio value and support rising future income through capital appreciation or selective withdrawals.

The post I’d buy these 5 ASX dividend investments for retirement income appeared first on The Motley Fool Australia.

More reading

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• BHP shares tumble as strike threat hits iron ore giant
• BHP shares slump 13% from their peak: Are the ASX mining shares a buy, sell or hold?

Motley Fool contributor Marc Van Dinther has positions in BHP Group. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Transurban Group. The Motley Fool Australia has positions in and has recommended Transurban Group. The Motley Fool Australia has recommended BHP Group, Vanguard Australian Shares High Yield ETF, and Vanguard Msci Index International Shares ETF. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.