$4,000 buys 2,564 shares in an impressively reliable ASX dividend stock

Detailed summary

This stock offers significant dividend income. The post $4,000 buys 2,564 shares in an impressively reliable ASX dividend stock appeared first on The Motley Fool Australia.

Future Generation Global Ltd (ASX: FGG) is a leading listed investment company (LIC) that could be one of the best ASX dividend stock options over the rest of the decade. I think it's a strong pick today for passive income.

I'm already a shareholder in the business and I'm planning to buy more in the coming months thanks to the size and growth of payouts, the diversification it gives my portfolio, and the philanthropic reason for its existence.

It's not a significant portion of my portfolio, but I envisage making multiple investments over the rest of the decade.

Investors wanting ASX dividend stocks will understandably be focused on the potential passive income, so let's look at that aspect of the business first.

The job of an LIC is to generate investment returns for shareholders by investing in other shares and assets. It can then turn some of those investment profits into a dividend for that year and retain some gains for future growth and future dividend payments.

Future Generation Global regularly increases its annual dividend for shareholders. The annual payout (excluding special dividends) has progressed as follows:

That means Future Generation Global will increase its payout by 40% between FY21 and FY26.

With the planned payout of 8.4 cents per share in FY26 – the 2026 financial year finishes in December 2026 – the business offers investors a very sizeable dividend yield of 5.4% excluding franking credits, and 7.7% including franking credits.

There are few businesses on the ASX that have a dividend yield that high and have increased the payout every year this decade so far.

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