Listed investment companies are an attractive way for many investors to get low-cost exposure to the share market whilst generating good income.
There are many LICs out there including Australian Foundation Investment Co. Ltd. (ASX: AFI) and Milton Corporation Limited (ASX: MLT).
One of the largest and longest running LICs is Argo Investments Ltd (ASX: ARG). Here are some of the main things to know about it:
History
Argo was set up in 1946 and then listed on the ASX in 1950, making it one of the oldest LICs on the ASX. It also speaks volumes that Donald Bradman was the chairman at one point in the past.
Holdings
Argo is a LIC that focuses on the large end of the Australian share market.
Consequently, it has some of the most recognisable names as its biggest holdings including Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES), BHP Billiton Limited (ASX: BHP) and Macquarie Group Ltd (ASX: MQG).
The further down the list of holdings you go, the more it differs from its peers. For example, it has a much bigger shareholding of Australian United Investment Company Ltd (ASX: AUI) compared to others.
I like Argo's holdings as they seem defensive and dividend-focused.
Performance
Argo's performance is not going to be as strong as Berkshire Hathaway's over the long-term due to its investment style, but it has still produced a respectable 7.2% over the last year. Over the last five years the average return per annum has been 10.5%. These returns are after deducting expenses and taxes.
Dividends
Every LIC realises its shareholders need good, regular income.
Argo has been growing its dividend every year since 2012. It has paid a dividend every year since its inception.
It currently has a grossed-up dividend yield of 5.68%.
Foolish takeaway
For investors wanting a really passive investment with decent dividends, then Argo Investments could be a good part of that portfolio. I wouldn't expect much capital growth, but that's the price of relative safety and good dividends.
