The listed investment company (LIC) space can be a great place to find high levels of dividend income.
The company structure allows investment managers to convert the capital gains they make into a steadily-increasing dividend.
Some LICs do come with high fees, but sometimes the net total returns are worth it. Just the income alone may be attractive enough.
Here are three LICs with huge dividend yields:
Clime Capital Ltd (ASX: CAM)
Clime is a small cap LIC that has increased its dividend every year since 2012, which is a pretty impressive record considering it has a grossed-up dividend yield of 8.5%.
The LIC uses a diversified investment approach to pick its shares. It does invest in some ASX blue chips, but it also invests in smaller ASX businesses like Afterpay Touch Group Ltd (ASX: APT) and Webjet Limited (ASX: WEB) as well as international shares like Facebook and Samsung.
Naos Emerging Opportunities Company Ltd (ASX: NCC)
This Naos LIC has increased its dividend every year since 2013 and it currently offers a grossed-up dividend yield of 9.5%.
It is focused on just the smallest businesses on the ASX. It targets industrial ASX shares with market capitalisations under $250 million. It has done this well, despite the recent market declines Naos is still showing an average return of 13.2% per annum since inception in 2013 after expenses but before fees.
WAM Research Limited (ASX: WAX)
WAM Research has increased its dividend every year since the GFC and it currently has a trailing grossed-up dividend yield of 9.6%.
WAM Research focuses on small and medium sized ASX businesses. Over the past five years its portfolio has returned an average return of 13.6% per annum before fees and expenses. To achieve this return whilst holding a high level of cash is impressive and comforting. It has been one of the best-performing LICs on the ASX in recent years.
Each of the above shares have increased their dividends for at least five years. It would probably take a much steeper decline than what we’re currently experiencing to knock their dividends down. Income seekers are getting a trailing grossed-up yield of nearly 10% with the Naos and WAM Research LICs.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended Webjet Ltd. 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.