Bank interest used to provide enough income for safety, but term deposits from banks like Commonwealth Bank of Australia (ASX: CBA) just don't cut it any more. The yields presented from property are also very low.

Businesses make profits and they can then pay out some of those profits as a dividend. Share prices are naturally volatile – each day the share market is made up of different buyers and sellers.

Here are two ASX shares with long histories of paying reliable income:

Brickworks Limited (ASX: BKW) 

Brickworks has grown or maintained its dividend every year since 1976 and it currently has a grossed-up dividend yield of 4.1%.

The diversified property businesses has a number of top building products businesses that operate across brickmaking, roofing, precast and so on. Australians will always be building or re-building property, so Brickworks is well positioned for earnings over the long-term.

It has also recently acquired a few brickmakers in the US which has catapulted into a market-leading position in the north east of the country. It's going to work on improving the profit margins there over the next few years. This has increased its earnings diversification.

Brickworks owns a 50% stake of an industrial property trust with Goodman Group (ASX: GMG). This is providing a growing stream of reliable rental earnings and valuation rises. 

Finally, Brickworks still owns a large holding of long-term investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) which is providing a growing source of earnings and dividends.  

Diversified United Investment Limited (ASX: DUI) 

Going back to FY93, listed investment company (LIC) has increased or maintained its dividend every year. It currently has a grossed-up dividend yield of 4.2%

It's invested in growing businesses – CSL Limited (ASX: CSL) and Transurban Group (ASX: TCL) make up more than 20% of its portfolio. It's also invested in globally-focused exchanged-traded funds (ETFs) which accounted for 13.7% of its portfolio at 31 January 2020.

Its dividend has been consistently growing over the past few years and I'd prefer to buy it compared to other old-school LICs.

Foolish takeaway

Both of these businesses have been solid dividend payers for a very long time and I think their dividends can continue to be more reliable than the overall market for the long-term. At the current prices I'd go for Brickworks, but DUI could be a solid pick today too.

The post Want reliable retirement income? Try these 2 ASX shares appeared first on The Motley Fool Australia.

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.

The post HY20 result: Is this the best dividend share on the ASX? appeared first on The Motley Fool Australia.

What is Diversified United Investment?

It's a listed investment company (LIC) which has been operating since 1991 and it invests in Australian shares and international shares.

It has maintained or grown its dividend every year since FY93, which is a very reliable record.

What are some of its top holdings?

At the end of January 2020 its three largest individual investments were CSL Limited (ASX: CSL) being 14.7% of the portfolio, Transurban Group (ASX: TCL) being 7.2% of the portfolio and Commonwealth Bank of Australia (ASX: CBA) being 7.1% of the portfolio. I think these are some of the better blue chips within the ASX20. 

However, some of its top 25 holdings are different and more growth focused than what you'd see in a normal ASX 200 (ASX: XJO) index. For example, some of its other larger holdings include Washington H. Soul Pattinson and Co. Ltd (ASX: SOL), Idp Education Ltd (ASX: IEL), Ramsay Health Care Limited (ASX: RHC) and Sonic Healthcare Limited (ASX: SHL).

Interestingly, the LIC's top 25 holdings also include six globally-focused ETFs. Those six ETFs make up 13.7% of the LIC's total investments. Some of those ETFs include a tech ETF, a healthcare ETF, an emerging market ETF, a global share market ETF and a US share market ETF.

DUI's HY20 profit numbers

The LIC reported that its profit after tax and before net realised and unrealised gains and losses was $17.4 million, up 2.2% compared to last year. Revenue was up 1.6% to $20.9 million. Excluding special dividends, revenue fell 0.9% and profit after tax fell 0.8%.

Earnings per share based on profit after tax was 8.2 cents, up from 8.1 cents.

The results of LICs can seem confusing because they deliver investment returns, a return of -5% can seem bad in an absolute dollar sense compared to last year's result, whilst generating a return of 10% in one year and 20% in another year shows profit doubling in dollar terms. LIC profits aren't consistent like normal operating businesses.

The net tangible asset (NTA) backing per share based on the market valuation of investments was $5.01 at 31 December 2019, compared to $4.10 at the end of the prior corresponding period, an increase of 22.2%.

For the half-year performance, the NTA (plus dividend) return was 5.8% while the S&P/ASX 200 Accumulation Index rose 3.1%, meaning the LIC outperformed the index.

DUI dividend

As I mentioned earlier, DUI has grown or maintained its dividend every year since FY93. It has increased its annual dividend each year over the past few years, though in this half-year result the LIC decided to maintain the dividend at 7 cents per share.

That means the current grossed-up dividend yield is 4.25%, though I suspect DUI may increase its FY20 final dividend to add to its growth streak.

Is DUI a buy at this share price?

I like DUI more than most of the other "old" LICs on the ASX because it is invested a bit more for growth and it indirectly owns international shares, though its yield is a bit lower than other LICs – however it's delivering long-term income growth for shareholders.

 It's currently trading at a 1.5% discount to the NTA disclosed at 31 January 2020, so it's actually decent value, most of the other "old" LICs are trading at small premiums to their net assets now, so DUI would probably be a better value choice.

The post Solid HY20 dividend result: Is this income stock too good to miss? appeared first on The Motley Fool Australia.

Reliable income is the goal at that point. With this in mind, here's where I'd invest for a sustainable income stream in retirement.

Diversified United Investment Limited (ASX: DUI)

DUI is one of the most reliable LICs on the ASX. The company has never cut dividends in more than 25 years as a listed company. Quite the opposite, it has been regularly increasing the income paid to shareholders.

It holds a diversified portfolio of mostly large Aussie shares, like CSL Limited (ASX: CSL), Transurban Group (ASX: TCL) and Wesfarmers Ltd (ASX: WES).The portfolio also contains 16% weighting to international shares, through a few ETFs.

Fees are very low, at 0.15% per annum, and the current dividend yield is 5.3% including franking credits.

Brickworks Limited (ASX: BKW)

Part building products company, part investment company, Brickworks is as reliable as they come. It owns brands such as Bristile Roofing and Austral Bricks, and has large investments in an industrial property trust and a very large holding in Washington H. Soul Pattinson & Co Ltd (ASX: SOL).

The holding in Soul Patts is in fact, worth more than the market value of Brickworks. This means you're getting the property assets and building products businesses for nothing.

As for income, Brickworks has only cut dividends once since listing in 1962. That itself is an incredible achievement. The payout ratio is currently very low at just 39%, giving the company plenty of cushion in a building downturn, and even scope to continue increasing the dividend.

Brickworks currently trades on around 11 times earnings and a dividend yield of 5.1% including franking credits.

Foolish takeaway

These two companies are about as solid as they come. I'd be happy relying on dividend payers like this as sources of retirement income. For more dividend share ideas, you can check out the brand new report just released by the Motley Fool's expert analysts below.

The post 2 rock-solid dividend shares you should own in retirement appeared first on The Motley Fool Australia.

What's more important than a high starting yield, is a sustainable income. It's no good buying a high yield stock like Telstra Corporation Ltd (ASX: TLS) if it ends up cutting its dividend. This is a risk you don't want to take with your retirement income. Therefore, sustainability is very important.

Here are two companies I'd buy today for a very reliable sleep-at-night income stream…

Diversified United Investment Limited (ASX: DUI)

DUI is a listed investment company, founded in 1991. It holds a portfolio of shares based on current income and potential for future growth.

DUI holds shares in many large blue chip companies such as CSL Limited (ASX: CSL) and Commonwealth Bank of Australia (ASX: CBA). There's also international exposure, with international ETFs making up around 16% of the portfolio.

The company is run at a very cheap 0.15% per annum, which includes the fees for the ETFs it holds. DUI has proven its reliability over the decades. Since 1992, dividends have either been stable or increased every single year.

On top of that, DUI has been able to grow its dividend by 6.6% per annum over the last 25 years. So you can expect that income to grow nicely into the future. Shares currently trade on a gross dividend yield of 5.3%, including franking credits.

Brickworks Limited (ASX: BKW)

Brickworks is an unusual business. It's primarily a building materials company, but it also owns over 42% of Washington H. Soul Pattinson & Co Ltd (ASX: SOL) and has a large stake in an industrial property trust.

Both of these investments underpin the value of Brickworks, adds diversification and also boosts earnings when the construction cycle turns. In fact, the value of these investments is worth more than the current market cap of Brickworks, meaning you're buying the building materials business for free.

The company is an incredibly reliable dividend payer, having only cut dividends once in over 50 years. This year the dividend was increased by 6% and with a low payout ratio of only 39%, there's plenty of scope for further increases.

Brickworks currently trades on a gross dividend yield of 4.4%, including franking credits.

Foolish takeaway

With these two companies, you can sit back and watch the income growth over the years. Each has proven their worth as rock-solid dividend payers. To find out the Motley Fool's current number one dividend pick, check out the free report below.

The post 2 of the strongest ASX dividend shares for retirees appeared first on The Motley Fool Australia.

The best place to start when looking at these vehicles, is with the oldest investment companies. Quite often, they will be the most conservatively managed, have the lowest costs, and will have been through many, many market cycles.

Here are two LICs which get much less attention, yet have delivered an impressive income stream for shareholders:

Diversified United Investment Limited (ASX: DUI)

Founded in 1991, DUI holds a portfolio of shares for their current income and potential for capital growth over time.

The company holds shares in many large companies including CSL Limited (ASX: CSL) and Commonwealth Bank of Australia (ASX: CBA). It also invests in international ETFs which make up around 15% of the portfolio.

DUI is run at rock-bottom costs of 0.15% per annum, which includes the fees for the ETFs it holds. And its dividend history is nothing short of incredible. Since 1992, dividends have either been stable or increased every year.

In fact, DUI has been able to grow its dividend by 6.6% per annum over the last 25 years. Shares currently trade at a discount to NTA, and a gross dividend yield of 5%, including franking credits.

Australian United Investment Limited (ASX: AUI)

Managed by the same investment team as DUI, this company was founded in 1953 by Sir Ian Potter. Today, the Ian Potter Foundation Ltd is the largest shareholder of both AUI and DUI, and it's clear that income stability is a key focus for each company.

AUI holds a portfolio of 40-50 shares on the ASX which it deems to have good prospects for income and growth over the medium to long term. The company is run at an ultra-low-cost 0.10% per annum, which is about as cheap as it gets.

AUI's dividend history is also impressive. Since 1992, dividends have either been stable or increased every year. The company has grown its dividend by an average of 6.4% per annum.

Shares currently trade at a discount to NTA of over 5%, and a gross dividend yield of 6%, including franking credits.

Foolish takeaway

It's my view that LICs like this are perfect for people wanting to live on a stable and increasing stream of dividends. You simply won't get this level of income stability with an index fund. This can make all the difference when the markets head south, because reliable dividends often mean more to the retiree than chasing high returns.

The post 2 proven LICs that have never cut dividends in 25 years appeared first on The Motley Fool Australia.

With every year that passes, there are more of these vehicles listed on the market and it's becoming a bit overwhelming.

We're spoilt for choice and it's hard to know which companies are actually worth our investment dollar. Here are two LICs that are less well-known, but I think have proven their worth over the long-term…

Carlton Investments Limited (ASX: CIN)

An unusual investment company, Carlton Investments owns a portfolio of 75 dividend-paying stocks, along with a very large position in Event Hospitality and Entertainment Ltd (ASX: EVT). The position in Event makes up around 44% of the portfolio.

The company regularly trades at a discount to its NTA (net portfolio value per-share) – often over 10%, which helps to mitigate the concentration risk.

The total return over the last 10 years has been 11.5% per annum, eclipsing most other LICs, due to its large holding in Event. Better than that, over the last 15 years, Carlton has increased its dividend by 8.3% per annum.

The management fee is a rock-bottom 0.08% per annum and its Chairman, Alan Rydge, has a very substantial shareholding and is also the Chairman of Event Hospitality. Carlton currently trades on a yield of around 3.5%, or 5% grossed-up.

Diversified United Investment Limited (ASX: DUI)

This LIC has been listed since 1992 and is a quiet achiever. The company invests in a diversified group of Aussie dividend-paying shares, as well as a few international ETFs – which make up over 10% of the portfolio.

DUI has provided total returns which are slightly ahead of the market and a solid growing dividend. The company has never cut its dividend, and over the last 20 years, the company has increased its dividend by 5.4% per annum.

It also regularly trades at a discount to its NTA – usually up to 5%. DUI currently trades on a yield of 3.5%, or 5% grossed-up.

Foolish takeaway

Both companies are not as popular as the big LICs and that could provide an opportunity for investors who like buying assets at a discount. I think both of these companies are worth considering for a reliable and growing stream of fully-franked dividends.

The post 2 under-the-radar LICs with growing fully-franked dividends appeared first on The Motley Fool Australia.

Today, the company reported that revenue came in at $19.2 million, which was down by 1.7% from the prior corresponding period. Excluding special dividends, the revenue rose by 7.9% and the profit rose by 7%.

Profit after tax but before net realised and unrealised gains and losses on the investment portfolio was $15.6 million, down 4.4%.

Earnings per share (EPS) based on profit after tax was 7.5 cents. Excluding special dividends the EPS grew by 7%.

The declared interim dividend was 6.5 cents per share, compared to 6.5 cents per share in the prior corresponding period. This dividend will be fully franked and the record date will be 23 February 2018.

The net tangible asset per share (NTA) was $4.23 at 31 December 2017, this was a rise of 10.7% compared to 31 December 2016.

The company's performance of its NTA and dividends together generated a return of 7.9% compared to the 8.4% return of the S&P/ASX 200 Accumulation Index.

At the end of the period Diversified United's biggest five positions were Commonwealth Bank of Australia (ASX: CBA), CSL Limited (ASX: CSL), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and Transurban Group (ASX: TCL).

Foolish takeaway

Diversified United's yield is quite good at 5.1%, although there are LICs out there with bigger yields. I think Diversified United is one of the better LICs that focus on the large caps of Australia, I also like that a small part of its portfolio is devoted to international ETFs.

At the current price I don't think Diversified United is a buy, but if the Aussie market suffers a fall then it could be worth a look.

The post Is Diversified United Investment Limited's 5.1% yield too good to miss after its report? appeared first on The Motley Fool Australia.

Large listed investment companies (LICs) like Australian Foundation Investment Co. Ltd. (ASX: AFI), Argo Investments Limited (ASX: ARG) and Milton Corporation Limited (ASX: MLT) generally track the index's returns over a short time period.

Therefore, it's impressive that Diversified United Investment Limited (ASX: DUI) managed to produce a total shareholder return of 23% over 12 months to 31 October 2017 according to Baillieu Holst Research.

Diversified United describes itself as a LIC founded in 1991 which invests in Australian equities and international equities. The Company's objective is to continue to provide shareholders with dividends and capital appreciation over the longer term within acceptable levels of risk. The LIC has maintained or increased its dividend every year since 1992.

One of the main reasons its outperformance has been impressive is its investment in CSL Limited (ASX: CSL). The healthcare giant was 8.1% of the portfolio at 31 December 2017.

CSL is by far Australia's largest healthcare business with a market cap of over $60 billion. However, its large size doesn't mean that its profit growth is slowing.

On a constant currency basis CSL's FY17's result was very impressive with revenue growing by 15%, underlying net profit after tax (NPAT) growing by 24% and underlying earnings per share (EPS) growing by 26%.

I'm a big believer in Australia's healthcare sector, I think it's the best industry to be invested in overall. Healthcare offers investors defensive earnings because of how valuable we deem our well-being, healthcare is a growing industry due to western society's ageing population.

CSL is fairly unique at the big end of the ASX, its research & development process takes several years before it can generate revenue from its products. This business is a good definition of investing for the long-term.

CSL is also still expanding its core business. It had 180 plasma collection centres at the end of FY17, but has plans to open a further 25 to 30 during FY18.

In FY18 CSL expects profit to grow by 10% to 16% in FY18, which is impressive considering this would be on top of an impressive FY17 result.

Foolish takeaway

CSL could be the best blue-chip stock to own in the ASX20, I'd be happy to own shares. I'm not sure today's price is good value, as it's currently trading at almost $143 per share. I imagine Diversified United will be happy holders for a long time.

The post Why CSL Limited is 8.1% of this high-performing LIC's portfolio appeared first on The Motley Fool Australia.

Australian United Investment Company Ltd (ASX: AUI) is one of those stalwarts that have been around forever.

History

Australian United was set up in 1953 by Sir Ian Potter and now The Ian Potter Foundation is the company's largest shareholder.

Performance

Australian United's aim isn't about making large short-term returns. Instead, it focuses on creating sustainable long-term returns for its shareholders.

Over the past five years its total shareholder return has been an average of 12.6% per annum.

Holdings

Australian United focuses on the large end of the Australian share market.

Some of its top holdings include Commonwealth Bank of Australia (ASX: CBA), Australia and New Zealand Banking Group (ASX: ANZ), Westpac Banking Corp (ASX: WBC), National Australia Bank Ltd (ASX: NAB) and Wesfarmers Ltd (ASX: WES).

The main difference between its portfolio and its large-cap focused LIC peers is its 4.5% holding of Diversified United Investment Limited (ASX: DUI). This company has a pretty similar list of holdings to Australian United, except it has a much bigger holding of CSL Limited (ASX: CSL).

Dividends

The best reason for investing in a LIC like Australian United is the dependable and pleasing dividends.

It has maintained or grown its dividend every year since 1992 and currently has a grossed-up dividend yield of 5.86%.

Is it the best?

I think Australian United is one of the very best LICs that focuses on the large end of the Australian market, but I think there are other LICs out there that are better.

I would like to add Australian United to my portfolio at some point but I'll be waiting for a cheaper price before buying, perhaps around $7.

The post Is Australian United Investment Company Ltd the best LIC? appeared first on The Motley Fool Australia.

However, listed investment companies (LICs) may offer a viable alternative to an index tracker. Managers generally don't earn performance fees so running costs are low and implied fees are often similar to those of trackers.

I compared the performance of four LICs, Djerriwarrh Investments Limited (ASX: DJW), Diversified United Investments Limited (ASX: DUI), Mirrabooka Investments (ASX: MIR) and Milton Corporation Limited (ASX: MLT) against the SPDR S&P/ASX 200 Fund (ASX: STW), an index tracking fund.

The ten-year annual compound returns include both share price gains and dividends adjusted for franking credits and after management fees. For the LICs, management expense ratio (MER) is admin costs divided by average portfolio market value over the year to June 2015.

From the above information, it looks like any one of the above LICs is superior to the index tracker but there are several additional factors to consider before drawing this conclusion.

Most importantly, the share price movements of the LICs do not necessarily correspond to the value of their portfolios. For example, ten years ago Mirrabooka was trading at a 10% discount to its net tangible assets (NTA) and is now trading at a 12% premium. These valuation gains are unsustainable and do not reflect the underlying performance of the company.

The following table is based on gains in NTA per security rather than share price to unwind this effect. Collectively, the LICs still performed better than the index fund using this measure but by a smaller degree.

The second column shows how the current share price of each company compares to its most recently disclosed NTA per share value. Although prices follow NTA values over the long-term, if you buy an LIC when it is trading at a premium to its NTA, you are likely to experience lower returns as the valuation gap closes over time. Interestingly, Djerriwarrh commands the highest premium to its NTA yet delivered the worst ten-year performance of the companies.

The next problem is that it is impossible to know if the last ten years' performance will reflect the next ten. Each company has a different investment approach and so a closer look may reveal some clues.

Djerriwarrh Investments holds a portfolio made up of large-cap stocks and uses a small amount of debt, currently $75 million to leverage returns. The company also writes options to enhance returns which are covered by its equity holdings. Based on the performance figures in the tables above, it is questionable whether the use of options and debt enhances returns to shareholders at all. Despite having the worst ten-year performance, administration costs were the highest of the four LICs at $3.8 million in 2015.

Similar to Djerriwarrh, Diversified United Investments primarily holds large-caps and also uses a small amount of debt, currently $85 million. In November 2014, it raised $103 million to diversify into International shares which now make up 9.8% of its total portfolio in the form of unhedged exchange traded index funds. Administration costs were just over $1 million in 2015, the lowest of the four LICs.

Mirrabooka Investments is the smallest of the LICs with a market capitalisation of about $350 million and specialises in holding small and medium sized companies. The company writes options, but this is only a minor part of the operation compared to Djerriwarrh because the options market for small-caps is less developed. Administration costs were $2.2 million in 2015, less than Djerriwarrh, but because Mirrabooka operates the smallest portfolio of the LICs its MER was the highest.

Milton Corporation is by far the largest of the LICs with a $2.7 billion market cap and is also the oldest, having listed in 1958. It operates a diversified portfolio of 95 positions consisting mainly large-caps stocks. Last year administration cost were $3.4 million to manage a $2.75 billion portfolio, giving it the lowest MER.

Foolish takeaway

Overall, there appear to be good reasons to consider LICs as an alternative to index trackers. However, I would avoid buying shares in Djerriwarrh because it is trading at such a large premium to its NTA and recorded the weakest performance over the last ten years.

As a small-cap investor, my choice of the remaining three would definitely be Mirrabooka, as I believe it is no coincidence that it has delivered the best returns through investing in smaller stocks. Even so, I would only buy when its NTA per share is lower than its share price. Often LICs trade at significant discounts to their NTA during a recession, which is the best time to go shopping.

The post Why you should consider buying a Listed Investment Company appeared first on The Motley Fool Australia.

What many investors don't realise is that there are more LICs on the ASX than just Argo Investments Limited (ASX: ARG) and Australian Foundation Investment Co.Ltd (ASX: AFI) – the two largest LICs. According to the ASX, there are currently 65 LICs and Listed investment trusts (LITs).

The great thing for investors is that many of the LICs offer variety in the types of stocks they focus on, their investing strategies vary and in some cases, LICs can take both short and long positions, allowing them to benefit from downward moves as well as normal capital gains.

One example I own shares in is Contango Microcap Ltd (ASX: CTN). Currently sporting a fully-franked dividend yield of more than 8% and investing in smaller stocks with market caps of between $10 million and $350 million on the ASX gives me instant diversification with one security. Since inception in 2004, Contango has produced annualised returns of 16.4% before fees and taxes – well above the All Ordinaries Accumulation Index return of 9.4% (both include dividends).

Here's a closer look at 5 other LICs which are included in the S&P/ASX 200 (Indexasx: XJO) (ASX: XJO).

Milton Corporation Limited (ASX: MLT)

With a market cap of $2.9 billion, Milton is the third-largest listed LIC on the ASX behind AFIC ($6.7bn) and Argo ($5.3bn). All three sport ultra-low management fees of between 0.12% and 0.18% according to the ASX website. Milton is one of my favoured LICs, thanks to its low cost (0.12% in the year to June 2015), excellent management, a dividend every year since 1958, and returns of more than 10% annually over the past 10 years, beating the 7.8% from the index (both including dividends).

One thing to watch, as with all LICs, is the price compared to the last reported net tangible assets (NTA) per share. Milton had $4.39 in NTA per share at the end of June, below the current share price of $4.56, so investors might want to wait for a better entry price.

Djerriwarrh Investments Limited (ASX: DJW)

Djerriwarrh is one of those special LICs that 'soup's up its performance by selling options over part of its investment and trading portfolio, allowing the company to continue paying high dividend yields. Currently paying a 5.5% fully franked dividend yield, which grosses up to 7.9%, Djerriwarrh has paid a dividend yield of more than 5% over the past decade, but performance has suffered, with the LIC portfolio underperforming the S&P/ASX 200 Accumulation index. Another issue is that Djerriwarrh's shares consistently trade at a premium to its assets. Add in a management fee of more than double the top three (0.39%), and it's one LIC I'd be avoiding for now.

Diversified United Investment Limited (ASX: DUI) ('DUIL')

Diversified United Investment was founded in 1991 and has paid a dividend every year since listing in 1992/1993. The company currently pays a 4% fully franked dividend yield (grosses up to 5.7%) and its latest NTA per share at the end of June 2015 was $3.68. The current share price is $3.50 so is trading at a discount, although falls in July may have removed some of the discount. DUIL has very low operating costs – 0.07% in the latest half year. Interestingly, DUIL also invests in international exchange traded funds (ETFs), giving investors some exposure offshore – important when the Australian dollar has just dropped to its lowest level in six years. DUIL has outperformed the S&P/ASX 300 Accumulation index over the past 10 years, and its one LIC I'd be adding to the watchlist.

Mirrabooka Investments (ASX: MIR)

Like Djerriwarrh, Mirrabooka shares are trading at a massive premium to their underlying net tangible asset (NTA) backing per share. The current price is $2.65 compared to reported NTA of $2.29 at June 30, 2015, so this is no bargain. The good news is that the company has outperformed the S&P/ASX Mid cap 50 and Small Ordinaries Accumulation Indices over the medium to long-term (both including dividends reinvested).

One thing to also research when considering an LIC is to see which companies they invest in. Mirrabooka doesn't follow the usual path of following a major index and instead invests in a wide variety of medium-sized stocks. Its largest holding at the end of June 2015 was Qube Holdings Ltd (ASX: QUB).

Platinum Capital Limited (ASX: PMC)

Like many other LICs, Platinum trades at a substantial premium to its underlying assets. The main reason for that is its popularity – given the LIC has thrashed its index since inception in 1994. Platinum's fund has returned 13.3% per annum against the MSCI World Net Index of 6.8%. Platinum Capital invests around the world, with 39% of assets allocated to Asia, 23% to North America and the same to European companies. The LIC can also take short positions to juice up returns in falling markets.

It also helps that renowned fund manager Kerr Neilson is the driving force behind Platinum's performance, but the price for investors is a 1.5% management fee. All those factors need to be considered before building a stake in Platinum Capital.

Foolish takeaway

This review covers just 5 of the 65 listed investment companies on the ASX. For those looking for a quick and easy way to get into the market and instant diversification, LICs, including the ones mentioned above could be your best bet.

The post Beat the market with these 5 'lazy investor' stocks appeared first on The Motley Fool Australia.