This LIC is a great idea for any retiree's portfolio

Australian United Investment Company Ltd (ASX:AUI) is a LIC that could suit most retirees.

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If I were a retiree I wouldn't want to be worrying too much about my entire portfolio. I'd want a big portion of my portfolio to follow a simple buy and hold strategy.

One of the best ways to follow this idea would be listed investment companies (LICs). They are like normal companies except their only job is to invest in other businesses on behalf of shareholders.

There are dozens of LICs out there. One of the oldest and perhaps the best is Australian United Investment Company Ltd (ASX: AUI).

It was set up in 1953 by Sir Ian Potter and The Ian Potter Foundation Ltd is today the Company's largest single shareholder. Being sixty five years old and counting shows it is a long-term business.

The LIC takes a long-term view and invests in shares it thinks that can provide income and capital growth over time. Its top six holdings are Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), CSL Limited (ASX: CSL), Westpac Banking Corp (ASX: WBC), Wesfarmers Ltd (ASX: WES) and BHP Billiton Limited (ASX: BHP).

I think Australian United Investment could be a good choice for retirees because of its dividend. The grossed-up yield is currently 5.6%. However, it's the dividend history and the intention of the company that I like the most.

The dividend has been maintained or increased each year since 1992. That means the LIC has provided a solid source of income for shareholders for over a quarter of century. Knowing your income is likely to be the same or higher each year is very reassuring.

Foolish takeaway

Obviously, the strength of Australian United Investment over the past two decades has been down to the underlying holdings and Australia's impressive economic growth. I don't think the next decade will be as strong as the last two, but I'm sure Australian United Investment will endeavour to continue growing the dividend over time.

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. 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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