Australian United Investment Company Ltd (ASX: AUI) just reported its half-year result for the six months to 31 December 2019, is it the best dividend share on the ASX?
What is AUI?
AUI is a listed investment company (LIC) which invests in ASX shares. It has been operating since 1953 when it was set up by Sir Ian Potter and the Ian Potter Foundation Ltd is still the largest single shareholder.
AUI's profit numbers
For the half year ended 31 December 2019, AUI generated revenue from ordinary activities of $27.7 million, a fall of 2.6% from last year.
Net profit after tax was $24.5 million, which was down 0.8% from the prior corresponding period, and earnings per share (EPS) declined by 1%. The result included special dividends of $1.05 million. Excluding the special dividends and taxes on those dividends, profit after tax fell 4.4%.
AUI's net asset backing accumulation performance for the half-year to 31 December 2019, assuming all dividends were re-invested, was a rise of 4.4%, compared to the rise of 3.1% of the S&P/ASX 200 Accumulation Index. Don't forget, AUI's return is after taxes & expenses and the impact of gearing for which no allowance is made in the index. Including franking credits, the AUI return was 5.35% and the index's return was 3.8%.
AUI dividend
The Board of AUI decided to declare an interim dividend of 17 cents per share, the same as last year. Considering the slight profit fall, I think this was the right decision.
What are some of AUI's largest positions?
At the end of January 2020 its six largest positions were: CSL Limited (ASX: CSL), Commonwealth Bank of Australia (ASX: CBA), Transurban Group (ASX: TCL), Australia and New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC) and Diversified United Investment Limited (ASX: DUI).
An interesting group and somewhat different to the index, but a bit more growth focused.
Why could AUI be the best dividend share?
Since FY93 AUI has maintained or grown its dividend every single year. There are very few shares on the ASX with that type of record.
It currently has a grossed-up dividend yield of 5% and it's priced cheaper than its net assets disclosed at 31 January 2020. If you're looking for a defensive dividend option then I think this is one of the better options on the ASX with its diversified portfolio and low costs.
