NAOS Ex-50 Opportunities Company Ltd (ASX: NAC) is a listed investment company (LIC) that looks to invest in relatively small businesses on the ASX. Its target range is businesses worth between $400 million to around $1 billion.
It has a bias towards industrial businesses and looks to keep a concentrated portfolio of high-conviction ideas. At the end of June 2018 it had 11 holdings and 6.63% of the portfolio was cash.
Over the past three years its portfolio has generated an average return of 15.25% per annum before fees, which is a solid performance.
The LIC has also proposed to amend the benchmark to the S&P/ASX 300 Industrials Accumulation Index, which is a good move for shareholders.
Why it could be good for cashflow
The LIC aims to pay a sustainable growing fully franked dividend each year. It has increased the dividend each year since it started paying in the second half of FY15.
The company currently has a projected grossed-up dividend yield of 8.3% for FY18. This alone is an attractive yield, particularly as the LIC is trading at a 13% discount to the post tax NTA.
However, Naos just announced the proposed dates that it will pay a quarterly dividend. It is aiming to pay quarterly in November 2018, March 2018, June 2018 and then September 2018 which would then appear to bring it into a regular quarterly cycle.
Quarterly dividends even out the cash flow and a payment in June is a good idea as very few businesses on the ASX pay a dividend or distribution in that month. I like the changes that Naos has announced.
As long as NAOS Ex-50 Opportunities Company's net return after fees outperforms the ASX index and it continues to pay a growing dividend then it could be a good choice for a retiree's portfolio over the long-term.
