Dividends are one of the most pleasing aspects about investing in shares. It’s so satisfying to do no work for the companies you own, yet receive a dividend every six months.
Not only that, but the income on offer from many ASX shares is a lot higher than you could possibly get from all the various bank accounts that are out there. Even the best ones only offer an interest rate of around 2.8% to 3%.
So, to solve that income dilemma, here are three good listed investment company (LIC) shares on the ASX:
WAM Research Limited (ASX: WAX)
This LIC has one of the best dividend records on the ASX. It has increased its dividend each year since the GFC and currently offers a grossed-up dividend yield of 8.2%.
WAM Research is great at finding undervalued growth shares that are usually industrial in nature. Its portfolio has delivered an average return of 18.5% per annum over the past seven years before fees and expenses, soundly beating the ASX.
It keeps a good level of cash in the portfolio for protection and opportunities. It could be one of the best all-round dividend shares on the ASX. However, it’s currently trading at a handsome premium to its NTA.
Naos Emerging Opportunities Company Ltd (ASX: NCC)
This is the LIC that Naos has been running the longest. It focuses on small cap industrial shares that have market capitalisations under $250 million.
I really like the Naos way of doing things – the philosophy is to hold a small portfolio of high-conviction ideas that could deliver returns of 15% to 20% or more per annum over a three year (or longer) period. Since its inception in February 2013 the portfolio has returned an average per annum of 15.29% after expenses but before fees.
This solid performance with small caps has allowed the LIC to increase its dividend each year since the second half of FY13. It currently has a grossed-up dividend yield of 8.3%.
Clime Capital Limited (ASX: CAM)
Clime runs an interesting portfolio of ASX large caps, medium caps, small caps and international shares. It can invest in whatever share it thinks is good value.
In FY18 the Clime portfolio returned 12.9% net of fees, which is a solid performance in one year. Clime has steadily increased its dividend since 2012 and currently offers a grossed-up dividend yield of 7.7%.
All three shares have yields above 7.5%, which is very attractive in this era of low interest rates. At the current prices I’d probably choose the Naos LIC due to the current premium of WAM Research – I think a better price will be on offer for the WAM LIC over the next three or four months.
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Motley Fool contributor Tristan Harrison owns shares of WAM Research 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.