Is the Milton Corporation Limited (ASX: MLT) share price a buy?
I think most regular investors should at least consider Milton for a place on their watchlist. It's a listed investment company (LIC) that has been operating for around 80 years and has been listed since 1958. That's good longevity!
It invests in companies and trusts on the ASX, but doesn't seek to follow any stock exchange index. Milton aims for businesses that are well managed, have a profitable history and are expected to grow dividends over time.
Just like the other old LICs, Milton has a very low operating cost. It has an internal management structure which allows it to keep costs low and aligns the interests with shareholders, which is why the management expense ratio is currently 0.13%. This leaves higher net returns for shareholders.
Its top 20 holders are somewhat different to the index and other old LICs. It does have some big blue chip names in its holdings like Westpac Banking Corp (ASX: WBC), Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP). But, it also has holdings like Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Brickworks Limited (ASX: BKW) and ALS Limited (ASX: ALQ).
I like Milton's holdings the most compared to other old LICs like Argo Investments Limited (ASX: ARG) and Australian Foundation Investment Co.Ltd. (ASX: AFI).
Over the past decade Milton has delivered average total shareholder returns per annum of 8.85%, which doesn't include the benefit of franking. This isn't bad, but it's not great considering the past decade has seen a good recovery since the GFC for many individual shares and share markets.
Foolish takeaway
Milton currently offers a grossed-up dividend yield of 6.1% and is trading at around its pre-tax NTA. It's about fair value.
It would be my pick of the old LICs, but it's not trading at an attractive discount to its value like it can do sometimes. I think there are better ASX shares out there to buy for dividends and growth.
