The share market is full of different companies that are in different industries and aim to do different things.
There are a certain group of companies called listed investment companies (LICs) which just invest in other companies. Some LICs are very well known like Australian Foundation Investment Co. Ltd (ASX: AFI) and Argo Investments Limited (ASX: ARG) which have proven to be sound investments for decades.
However, further down the market cap list there's another group of quality LICs, one of those is Bki Investment Co Ltd (ASX: BKI).
Bki was formed in 2003 to manage the investment portfolio of Brickworks Limited (ASX: BKW), after Brickworks had already formed its core investment portfolio in the 1980s.
The LIC describes its investment strategy as being research driven, active equities management, investing for the long-term, in profitable companies, with a history of paying attractive dividend yields.
Bki aims to generate an increasing income stream for distribution to shareholders in the form of fully franked dividends.
So how much of a dividend does it pay? Bki pays the maximum of realised profits after tax to its shareholders to the extent permitted by the Corporations Act, the Income Tax Assessment Act and prudent business practices. In plain English the payout ratio target is 90% – 95% of the net operating result.
Some of its top holdings includes shares like National Australia Bank Ltd (ASX: NAB), Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Wesfarmers Ltd (ASX: WES), Australian and New Zealand Banking Group (ASX: ANZ), APA Group (ASX: APA), Transurban Group (ASX: TCL), TPG Telecom Ltd (ASX: TPM), InvoCare Limited (ASX: IVC) and Sydney Airport Holdings Limited (ASX: SYD).
The list of holdings is somewhat different to the ASX50, which is why it could be worth holding over an index fund. According to the latest monthly update, over the last seven years Bki has returned an average of 11.5% per annum (including franking credits) for shareholders, versus a 10.2% return per annum for the S&P/ASX300 Accumulation Index.
Foolish takeaway
Bki has a solid record and currently has a grossed-up dividend yield of 6%. If you're looking for a dividend option that consistently pays a reliable dividend then Bki could be the choice for you.
