The Motley Fool

Is this the safest dividend share on the ASX?

There are few companies on the ASX with a longer history than Australian United Investment Company Ltd (ASX: AUI). It’s a listed investment company (LIC) that was set up in 1953 by the late Sir Ian Potter and The Ian Potter Foundation Ltd is today the company’s largest single shareholder.

It could be classed as one of the safest dividend shares on the ASX because it has maintained or increased its dividend every year since 1992. Keeping this streak going for more than 25 years is very impressive in my opinion.

Australian United makes long-term investments in Australia’s largest companies. This approach means little brokerage costs and few capital gains events each year – allowing the portfolio to compound.

According to Baillieu Holst, Australian United has an extremely low annual management expense cost of 0.1% per annum. This is about as cheap as you can get for an ASX index-like portfolio.

Speaking of the portfolio, I like how some of its main positions do differ slightly to the index. Its weightings of CSL Limited (ASX: CSL) and Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), for example, are bigger.

Over the past year its NTA performance has been solid, though it closely matched the ASX Index’s performance which also had a good year.

Foolish takeaway

For investors such as retirees looking for a dependable flow of dividends year to year, I think Australian United is one of the better options out there. However, like any portfolio-type investor it relies on its underlying holdings to do well.

At the moment I can’t see Australian United generating much returns beyond the dividend in the near term – capital growth could be sluggish over the next few years. I am also looking for capital growth if I buy shares with a decent yield.

That’s why this top dividend stock looks like such a good choice to me, it delivered profit growth of 30% and dividend growth of around 20% in its latest result – with more growth predicted in the coming year!

The best dividend stock to own in September 2018

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Washington H. Soul Pattinson and Company 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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