MENU

Is this the best LIC on the ASX for retirement income?

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 September 2018 it had 12 holdings and 7.2% of the portfolio was cash. I like the strategy of only investing in shares you really believe are good ideas.

Over the past three years its portfolio has delivered an average return per annum of 16.76% after expenses, but before fees. There are few investment managers that have generated as strong of a gross performance as this over the past three years on the ASX.

Some of its current key investments include Reece Ltd (ASX: REH) and Helloworld Travel Ltd (ASX: HLO), both of which I think have good growth potential.

A key reason to consider this Naos LIC is that it aims to pay out a steadily-growing dividend. It has indeed paid out a growing dividend since the second half of FY15. It has recently switched to paying dividends quarterly, which should help shareholders’ cashflow.

It currently has a grossed-up dividend yield of 7.6%.

Some investors may not like the fees compared to some of the old LICs, however its benchmark was recently changed to the more relevant S&P/ASX 300 Industrials Accumulation Index.

Foolish takeaway

Based on the just-announced September 2018 NTA update, it’s trading at a sizeable 10.6% (or perhaps slightly more now) discount to the pre-tax NTA. Investors focused just on income could consider this LIC as part of a portfolio of dividend shares.

Another share to consider for dividends is this top dividend stock that just increased its dividend payout by 20%.

The best dividend stock to buy in October

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 has no position in any of the stocks mentioned. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.