Listed investment companies (LICs) offer investors an easy way to get instant diversification and income in the stock market.
The good news for investors is that LICs come in all shapes, sizes and varieties. Want large cap exposure – there are several LICs for that. Want small to medium cap exposure, again there’s a number of LICs that will give you that. Want international exposure or an absolute LIC that can go long as well as short – well, there are LICs for that too.
These 10 LICs all offer the benefits of diversification as well as strong dividend yields – most fully franked too…
|Company||Share Price||Market Cap||Dividends||Dividend Yield||Franking||Frequency|
|Aurora Property Buy-Write Income Trust (ASX: AUP)||$5.44||$12.0||0.44||8.1%||0%||Qtrly|
|Katana Capital Limited (ASX: KAT)||$0.76||$34.0||0.06||7.9%||75%||Qtrly|
|Bentley Capital Limited (ASX: BEL)||$0.14||$10.2||0.01||7.1%||100%||semi-annual|
|Cadence Capital Limited (ASX: CDM)||$1.29||$348.7||0.09||7.0%||100%||semi-annual|
|Westoz Investment Company Limited (ASX: WIC)||$0.88||$114.3||0.06||6.8%||100%||semi-annual|
|Djerriwarrh Investments Limited (ASX: DJW)||$3.58||$782.6||0.24||6.7%||100%||semi-annual|
|Contango Income Generator Ltd (ASX: CIE)||$0.98||$79.0||0.065||6.6%||50%||semi-annual|
|Watermark Market Neutral Fund Ltd (ASX: WMK)||$1.06||$96.0||0.065||6.1%||63%||semi-annual|
|WAM Capital Limited (ASX: WAM)||$2.42||$1,421.0||0.145||6.0%||100%||semi-annual|
|Clime Capital Ltd (ASX: CAM)||$0.80||$63.3||0.048||6.0%||100%||Qtrly|
Source: Company reports, Capital IQ, Commsec
While the yields look very attractive, investors also need to consider a range of other factors including; whether the share price is at a premium or discount to the LIC’s net tangible assets, if the LIC has a large number of options outstanding (which can dilute the shares), what the historical performance has been like as well as management fees, if the dividend yield is sustainable and what the underlying assets are in the LIC.
What is particularly interesting is that the two-largest LICs, Australian Foundation Investment Co.Ltd. (ASX: AFI) and Argo Investments Limited (ASX: ARG) both offer relatively lowly yields of 4.2% and currently trade at a premium to the underlying assets.
The 10 LICs above may well be much better options.
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The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.