Contango Microcap (ASX: CTN) is a listed investment company that provides shareholders with access to a diversified portfolio of micro-capitalisation (microcap) stocks.
Contango Microcap's total returns to shareholders are nothing short of impressive. Over the past 5 years while the Small Ordinaries Accumulation Index has returned 7.5% per annum (pa), Contango Microcap's share performance (including dividends) has been 17.2% pa. That's significant outperformance!
Portfolio Holdings
In total as at the 31 October 2013 the Contango Microcap portfolio held 71 securities. The 5 largest positions – each representing around 3% – within the portfolio were:
1) Iproperty Group (ASX: IPP) – the largest operator of real estate advertising portals in South East Asia.
2) Tiger Resources (ASX: TGS) – a copper producer in the Congo, Africa.
3) Slater & Gordon (ASX: SGH) – Australia's largest listed legal practice which is also expanding into the UK.
4) Ausbrokers Holdings (ASX: AUB) – one of the top general insurance broking groups in Australia, with turnover in excess of $1.5 billion in general insurance premiums and over $450 million in funds under management.
5) G8 Education (ASX: GEM) – a fast growing consolidator of child care services.
Dividend Policy
The company has a stated dividend policy to pay annual dividends, amounting to a minimum 6% pa of the company's net tangible asset (NTA) value prevailing at the commencement of the financial year. On top of this policy, management goes even further and provides shareholders with their expectations for near-term future pay-outs.
The stock currently trades at a discount to its reported October after tax NTA of $1.19. Based on the current share price of $1.08 and Contango's guidance of provisional dividends totalling 6.3 cps in the coming financial year, the stock is trading on a 5.8% dividend yield.
Foolish takeaway
For investors looking for a broad exposure to a wide selection of 'up-and-coming' small listed companies and a solid dividend should perhaps consider adding Contango Microcap to their watch list.
