An ASX dividend stalwart every Australian should consider buying

ASX dividend stalwarts could be the right investments to buy in this uncertain era because of the resilient dividend income they can provide investors.

The listed investment company (LIC) Australian Foundation Investment Co Ltd (ASX: AFI) should be one of the businesses that income-focused investors look closely at because of multiple factors, in my opinion.

It offers much more than a solid dividend yield for investors, though that is a strong starting point. Let's get into why it's a good buy today.

Dividend yield

One of the first things that Australians may look at is how much passive income they're expecting from an investment.

Pleasingly, the business has maintained or grown its annual ordinary dividend every year this century. That's a pleasingly consistent level of passive income compared to many other stocks known for their dividends.

In FY25, the business slightly increased its annual payout to 26.5 cents per share, which translated into a grossed-up dividend yield of 5.3%, including franking credits.

Diversification

One of the reasons that AFIC is a compelling ASX dividend stalwart is because of the useful diversification it offers.

It's invested in a wide array of ASX shares from different sectors, giving the portfolio pleasing diversification.

Some of the LIC's larger holdings include BHP Group Ltd (ASX: BHP), Commonwealth Bank of Australia (ASX: CBA), CSL Ltd (ASX: CSL), Macquarie Group Ltd (ASX: MQG), Wesfarmers Ltd (ASX: WES), Transurban Group (ASX: TCL), Goodman Group (ASX: GMG) and Telstra Group Ltd (ASX: TLS).

As time goes on, I think AFIC's portfolio is likely to become even more diversified.

I like that some of its portfolio is allocated towards more growth-focused businesses such as Resmed CDI (ASX: RMD), ARB Corporation Ltd (ASX: ARB) and REA Group Ltd (ASX: REA), helping drive returns and capital growth for AFIC over time.

Low fees

Some LICs have high levels of management fees, while AFIC is one of the LICs with the lowest fees. That means more of the portfolio returns stay in the hands of shareholders, rather than being lost to a fund manager.

The business currently has a low management cost of 0.16% and no additional fees.

Good value ASX dividend stalwart

There are a number of different ways to value a business – AFIC regularly tells investors about its net tangible assets (NTA) value, which is predominantly the share portfolio value and cash.

On 28 November 2025, the business had a pre-tax NTA of $7.91. The AFIC share price is trading at a discount of around 10% to its underlying value, which I think is a very appealing valuation and I think this makes it an appealing time to invest for the long-term.

The post An ASX dividend stalwart every Australian should consider buying appeared first on The Motley Fool Australia.

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 ARB Corporation, CSL, Goodman Group, Macquarie Group, ResMed, Transurban Group, and Wesfarmers. The Motley Fool Australia has positions in and has recommended Macquarie Group, ResMed, Telstra Group, and Transurban Group. The Motley Fool Australia has recommended ARB Corporation, BHP Group, CSL, Goodman Group, and Wesfarmers. 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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