The more I learn, the more I appreciate investments where I don’t have to think too much about it. Investments that need no monitoring. Where I can simply direct my cash and be pretty sure of a decent return over the long term.
This is why I tend to favour old reliable conglomerates like Wesfarmers Ltd (ASX: WES) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL). On top of this, I really like the simplicity of listed investment companies (LICs) with capable management and a long-term focus.
With this in mind, here’s where I’d direct $10,000 today, and park it there for the long term.
Argo Investments Limited (ASX: ARG)
Investment – $5,000.
One of the oldest LICs in Australia, Argo has been getting the job done for over 70 years. It has seen many market cycles and management teams over that time. But Argo’s culture is one of low-cost and investing for an increasing dividend stream for shareholders.
Regardless of the latest fads like pot stocks or lithium miners – most of which will never turn a profit, Argo will continue to invest conservatively, in profitable dividend-paying companies. The portfolio is currently made up of 100 companies across a range of industries.
The company’s endurance is built on an investment process, not on the back of a gun stock-picker who could up and leave at any time.
Shares currently trade on a gross dividend yield of 5.5%.
QV Equities Ltd (ASX: QVE)
Investment – $5,000.
This LIC has only been listed for a few years, so QVE hasn’t got a very long history. But the manager of QVE – Investors Mutual (IML) – has been around for 20 years, running managed funds with good success.
IML has a solid track record of providing strong returns from their various funds, especially their small-cap funds which have thrashed the market for up to 20 years.
This LIC is focused on the ex-20 area of the market, so it can complement an investor’s portfolio which may be heavy in banks and miners, for example. The team focus on mostly industrial dividend-paying stocks and tend to shy away from resources, due to the highly unpredictable nature of earnings and dividends.
Currently, QVE is trailing the market due to the strong run of late by resources stocks. Regardless, QVE is staying true to its knitting, picking up shares in good quality industrials trading at attractive prices. A key focus for QVE is companies providing reliable earnings streams and dividend growth, which it can pass on to shareholders.
Shares currently trade on a gross dividend yield of 4.8%.
The market seems to be sulking about this recent underperformance, with QVE now trading at a discount to NTA of around 5%. I feel that provides us with an attractive entry point for investors who believe in QVE’s philosophy and are focused on the long-term earnings and income stream.
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Motley Fool contributor Dave Gow owns shares of Argo Investments Limited and QV Equities 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.