Should you invest in Bki Investment Co Ltd for its large 6.68% yield?

Bki Investment Co Ltd (ASX: BKI) is one of Australia’s largest listed investment companies (LICs) with a market capitalisation of nearly $1 billion. The LIC released its quarterly investment report earlier today and made a staunch defence of franking credits for its shareholders.

This LIC has a management expense ratio of 0.17%, which is one of the lowest in the industry.

It looks to invest for the long-term in profitable, high yielding and well managed companies. Bki aims to increase the dividend over the long-term and it has done this effectively.

Over the last 10 years Bki’s total shareholder return has been an average of 8.3% per annum compared to the S&P/ASX 300 Accumulation Index average return of 5.2% per annum. This translates to a 3.1% average outperformance per annum over the past decade.

It owns shares of many of Australia’s blue chips like National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC) and Wesfarmers Ltd (ASX: WES).

Foolish takeaway

Bki is currently trading with a trailing grossed-up dividend yield of 6.68%, which is quite good, and it has proven to be a very consistent dividend payer over the last 15 years. The share price is $1.56 compared to the pre-tax NTA of $1.54 and the post-tax NTA of $1.47. Bki has a reasonably good record but I wouldn’t buy it just for the dividend, I’d want a stronger performance from the underlying portfolio.

That’s why I’d much rather invest in this top dividend stock if I wanted growth and growing dividends over Bki.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool Australia owns shares of 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 Scott Phillips.

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