Most of us try our hand at picking our own stocks at one point or another. It can be fun and interesting even if we don’t beat the market, and incredibly rewarding if we do. In either case, many of us will still have a group of core portfolio holdings that we plan to never sell. This may include a couple of index funds or listed investment companies (LICs).
Here are a few of my favourite LICs that I plan to hold in my core portfolio for the very long term…
Argo Investments Limited (ASX: ARG)
This company has been around since 1946 providing investors with a growing dividend stream as well as capital growth. Argo holds a portfolio of approximately 100 shares in many different sectors, so the LIC has exposure to a wide range of businesses in the economy.
The main priority is providing shareholders a solid and growing income over time, which Argo has successfully delivered. In the last 5 years the dividend has been increased by 3.6% per annum. Currently shares trade on a grossed-up dividend yield of 5.64%.
QV Equities Ltd (ASX: QVE)
QVE has only been listed for a few years so far, but the investment manager – IML – has been managing unlisted funds for 20 years. IML has provided strong returns across all of its funds and reports performance after fees, which is refreshing and increasingly rare for active managers.
QVE’s mandate is to invest in a portfolio of 20-50 shares outside the top 20, which means it can provide great diversification for investors who are heavily exposed to the big banks and Telstra Corporation Ltd (ASX:TLS) for example.
The manager has underperformed the benchmark since listing, but I’m confident in IML’s investment process and believe it will provide solid returns and a growing income stream over the only time-frame that matters – the long term.
Shares currently trade on a grossed-up dividend yield of around 5%. In addition, when comparing its share price to the underlying portfolio, its trading at a discount to NTA of 5%.
Both of these LICs provide diversified sources of income and are part of my core portfolio. While I do hold individual stocks too, the bulk of my dividend income will be sourced from holdings like this for the very long term. These companies are run by conservative managers and their investment philosophy matches my own – to invest across a wide range of businesses for a growing dividend stream.
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Motley Fool contributor Dave Gow owns shares of Argo Investments Limited, QV Equities Limited, and Telstra Limited. The Motley Fool Australia owns shares of and has recommended Telstra 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.