Deciding where to start in the share market is a difficult task, there are literally thousands of entities listed on the ASX. Some people just start with the biggest companies that they know of like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS).
But there are other options, such as listed investment companies (LICs). LICs invest in other companies for you.
The biggest two by market capitalisation are Australian Foundation Investment Co. Ltd. (ASX: AFI) (AFIC) and Argo Investments Limited (ASX: ARG) at $6.5 billion and $5.09 billion in size respectively.
These two LICs invest in the big companies as part of their main holdings such as the big four banks, Telstra, BHP Billiton Limited (ASX: BHP), Wesfarmers Ltd (ASX: WES) and Woolworths Limited (ASX: WOW).
These two LICs have had comparable results to the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) over long periods, such as over 10 years, returning around 10% a year not including franking credits.
However the dividend yields aren't that juicy, AFIC's grossed up yield is 5.96% and Argo's grossed up dividend yield is 5.9%. There is another LIC that has similar investment holdings, but is priced lower with a higher dividend yield.
Australian United Investment Company Ltd (ASX: AUI) is a LIC with a market capitalisation of $897 million. It's been around since 1953 and it's likely to be around for decades to come.
It has a grossed up dividend yield of 6.68% and has increased or maintained its dividend every year since 2002, which includes during the GFC. There aren't many listed entities that can offer that level of security and reliable growth over the years.
The company's objective is to take a medium to long term view and to invest in a diversified portfolio of Australian equities which have the potential to provide income and capital appreciation over the longer term.
The current chairman of the board is Charles Goode who was the chairman of Australia and New Zealand Banking Group (ASX: ANZ) from 1996 to 2010 and chairman of Woodside Petroleum Limited (ASX: WPL) from 1999 to 2007. Having leadership with longevity provides the ability to focus on providing long term returns for shareholders.
Foolish takeaway
Foolish investors would be wise to have at least some of their portfolio invested in companies that have a long term outlook.
The Australian United Investments Company would make a good, diversified first investment for the beginner Fool or even a more experienced one.
