Most of us will know, or even own some of the largest LICs in Australia – like Australian Foundation Investment Co.Ltd (ASX: AFI) and Argo Investments Limited (ASX: ARG). With every year that passes, there are more of these vehicles listed on the market and it’s becoming a bit overwhelming. We’re spoilt for choice and it’s hard to know which companies are actually worth our investment dollar. Here are two LICs that are less well-known, but I think have proven their worth over the long-term… Carlton Investments Limited (ASX: CIN) An unusual investment company, Carlton Investments owns a portfolio of…
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With every year that passes, there are more of these vehicles listed on the market and it’s becoming a bit overwhelming.
We’re spoilt for choice and it’s hard to know which companies are actually worth our investment dollar. Here are two LICs that are less well-known, but I think have proven their worth over the long-term…
Carlton Investments Limited (ASX: CIN)
An unusual investment company, Carlton Investments owns a portfolio of 75 dividend-paying stocks, along with a very large position in Event Hospitality and Entertainment Ltd (ASX: EVT). The position in Event makes up around 44% of the portfolio.
The company regularly trades at a discount to its NTA (net portfolio value per-share) – often over 10%, which helps to mitigate the concentration risk.
The total return over the last 10 years has been 11.5% per annum, eclipsing most other LICs, due to its large holding in Event. Better than that, over the last 15 years, Carlton has increased its dividend by 8.3% per annum.
The management fee is a rock-bottom 0.08% per annum and its Chairman, Alan Rydge, has a very substantial shareholding and is also the Chairman of Event Hospitality. Carlton currently trades on a yield of around 3.5%, or 5% grossed-up.
Diversified United Investment Limited (ASX: DUI)
This LIC has been listed since 1992 and is a quiet achiever. The company invests in a diversified group of Aussie dividend-paying shares, as well as a few international ETFs – which make up over 10% of the portfolio.
DUI has provided total returns which are slightly ahead of the market and a solid growing dividend. The company has never cut its dividend, and over the last 20 years, the company has increased its dividend by 5.4% per annum.
It also regularly trades at a discount to its NTA – usually up to 5%. DUI currently trades on a yield of 3.5%, or 5% grossed-up.
Both companies are not as popular as the big LICs and that could provide an opportunity for investors who like buying assets at a discount. I think both of these companies are worth considering for a reliable and growing stream of fully-franked dividends.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
Motley Fool contributor Dave Gow owns shares in Australian Foundation Investment Co. Ltd and Argo Investments Limited. 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 Scott Phillips.