Bki Investment Co Ltd’s result: Operating profit up 7%

Bki Investment Co Ltd (ASX: BKI) has released its half-year result to 31 December 2017.

Bki is one of the largest listed investment companies (LICs) on the Australian share market. Its main aim is to invest in other shares and generate good returns for shareholders.

Its net operating profit increased by a respectable 7% compared to the prior corresponding period, whilst the ordinary investment income increased by 11%.

The earnings per share (EPS) before special dividend income increased by 4%, but EPS decreased by 11% when including special dividend income.

Bki attributed the operating profit growth to bigger dividends received from New Hope Corporation Limited (ASX: NHC), Insurance Australia Group (ASX: IAG) and Woolworths Limited (ASX: WOW).

It’s important to remember that Bki is a long-term investor and aims to beat its index benchmark over the ultra-long-term. Over the last year Bki’s total shareholder return (including franking credits) was 13.7% compared to 13.6% for the S&P/ASX 300 Accumulation Index.

Over the past 10 years Bki’s returns were 9.4% per annum and the index’s was 5.8% per annum. Over the past 14 years Bki’s total shareholder return per annum was 11.2% and S&P/ASX 300 Accumulation Index’s was 10.7% per annum.

Bki offers investors good long-term returns at a low cost, the management fee is only 0.10% which is far cheaper than most other managers.

The LIC has a history of increasing the dividend over the long-term and currently has a grossed-up dividend yield of 5.98%. The dividend was increased by 1% this time around.

Its top five largest holdings at 31 December 2017 were National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Wesfarmers Ltd (ASX: WES) and Australia and New Zealand Banking Group (ASX: ANZ).

Its portfolio also holds stakes in shares such as Challenger Ltd (ASX: CGF) and InvoCare Limited (ASX: IVC).

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Motley Fool contributor Tristan Harrison owns shares of Challenger Limited and InvoCare Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited and Wesfarmers Limited. The Motley Fool Australia owns shares of Insurance Australia Group Limited and National Australia Bank Limited. 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.

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