I think it's quite rare to find ASX dividend stocks that offer a mixture of both reliability and a good dividend yield. Future Generation Australia Ltd (ASX: FGX) is one of the best businesses for that combination of passive income factors, in my opinion.
If I were picking a business for dividends, I'd pick Future Generation Australia over names like Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), ANZ Group Holdings Ltd (ASX: ANZ), National Australia Bank Ltd (ASX: NAB), BHP Group Ltd (ASX: BHP), Rio Tinto Ltd (ASX: RIO) or Fortescue Ltd (ASX: FMG).
Part of the reason for that preference is the fact that Future Generation Australia is a listed investment company (LIC). That means it invests in other assets on behalf of shareholders and has the flexibility to decide on the size of its dividend payments.
This LIC is quite different to a typical LIC because there are no management fees involved. Instead, it's invested in the funds of more than a dozen different fund managers who work for free so that Future Generation Australia can donate 1% of net assets each year to youth charities. It's a great setup, in my opinion.
Let's look at the reliability and dividend yield of this compelling ASX dividend stock.
Reliable passive income option
The LIC is invested in more than 450 underlying shares across different sectors, giving it a pleasing level of diversification. This is a powerful tool to reduce risk and volatility.
Future Generation Australia itself reports that it has outperformed the ASX share market (to March 2026) by an average of 0.8% per year since its inception (September 2014) and this has been achieved with lower volatility.
It has a much larger weighting to small and medium ASX shares than the overall ASX share market, which I view as an advantage.
In terms of the dividend, it has grown its annual dividend per share every year since 2015, representing a decade of continuous dividend growth.
Good dividend yield
Not only has it been very consistent with increasing its payout, the dividend yield is very good.
Its 2025 annual payment was 7.2 cents per share, which translates into a grossed-up dividend yield of 7.8%, including franking credits.
Dividends aren't guaranteed, of course, but with a profit reserve of 45 cents per share, it can pay growing dividends for a number of years.
I think this seems like a great time to invest in the ASX dividend stock. At the time of writing, investing $1,000 would buy 757 Future Generation Australia shares. I'd love to do that.
The post $1,000 buys 757 shares in an incredibly reliable ASX dividend stock appeared first on The Motley Fool Australia.
Motley Fool contributor Tristan Harrison has positions in Future Generation Australia. 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 recommended BHP Group. 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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