2 proven LICs with massive fully franked dividends: should you buy?

I’m a big fan of listed investment companies. It’s an easy way to buy a diversified portfolio of shares in one basket.

There’s a huge number of LICs available on the market now – far too many to keep up with – many with different strategies. If you’re looking for a high-income today, here are 2 high yield LICs you might want to consider.

Platinum Capital Limited (ASX: PMC)

This is an international focused LIC, managed by Platinum Asset Management Limited (ASX: PTM). It’s been running since 1994 and has had market-beating performance over its 24-year history. Platinum Capital has had a return (after fees) of 12% per annum over that time, compared to the MSCI World Index return of 6.9% per annum, both including dividends.

The portfolio is currently heavily weighted towards Asia which has caused underperformance in recent years. Despite this, the company is sticking to its guns and sees many companies in this area with strong prospects and believe they’re currently undervalued.

Shares trade at a premium to NTA of over 10%. The current dividend yield is 8%, including franking credits.

WAM Capital Limited (ASX: WAM)

WAM is an ever-popular choice with retail investors who are looking for income. This LIC focuses on buying small and mid-sized companies which look undervalued and WAM believes will soon be re-rated higher by the market.

The unusual thing is WAM tends to hold a lot of cash, even more so when the market is going through periods of volatility. Currently, the portfolio is 35% cash. It’s a strategy that works for the company, with returns before fees since 1999, of 16.9% per annum. That compares to the All Ords Accumulation Index return of 8% per annum.

WAM’s focus is paying out large and growing dividends from gains realised in the portfolio. Shares are trading at a premium to NTA of around 20%. The current dividend yield is 9.9%, including franking credits.

Foolish takeaway

Both LICs are trading at premiums currently. This tells me that investors buying these shares are more focused on the dividend income than the NTA value of the company. Both are quality LICs that are well managed and have proven themselves over time, but I wouldn’t pay the large premium they’re trading at today.

Top 3 ASX Blue Chips To Buy For 2019

For many, blue chip stocks mean stability, profitability and regular dividends, often fully franked..

But knowing which blue chips to buy, and when, can be fraught with danger.

The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2019."

Each one pays a fully franked dividend. The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.

Click here to claim your free report.

Motley Fool contributor Dave Gow owns shares of WAM Capital Limited. The Motley Fool Australia owns shares of Platinum Investment Management 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.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!