Argo Investments Limited (ASX: ARG) is one of Australia's largest listed investment companies (LICs), with a market capitalisation of around $6 billion.
It has an illustrious history having operated since 1946, one of its previous chairmen was cricket legend Donald Bradman.
Today, the LIC released its results for the half-year to 31 December 2017.
The headline figure is that the bottom-line profit increased by 6.2% to $110.5 million from $104.1 million in the prior corresponding period. This translated to the earnings per share increasing by 4.6% from 15.2 cents per share to 15.9 cents per share.
The LIC has decided to use a lot of the profit growth to increase the dividend by 3.3% from 15 cents per share to 15.5 cents per share. The dividend is scheduled to be paid on 9 March 2018.
The company also recorded growth of 5.6% of the net tangible asset (NTA) backing per share from $7.63 to $8.06 at 31 December 2017. The NTA performance over the half-year was 6.8%, sadly underperforming the ASX200 Accumulation Index which returned 8.4%, admittedly the index returns don't account for costs or tax.
Management attributed the pleasing performance to improved dividends from a number of companies, particularly BHP Billiton Limited (ASX: BHP) and Rio Tinto Limited (ASX: RIO).
Argo's investment team continue to be cautious of relatively high valuations in some sections of the Australian share market. Indeed, Jason Beddow of Argo said "You'll get your dividends, but we might be where we are now" in regards to the outlook for 2018.
He believes that the big four banks, BHP and Rio could all be relatively safe in a substantial sell-off due to relatively steady earnings and because they're all trading at fair value, not expensively.
Foolish takeaway
Argo is currently trading with a grossed-up dividend yield of 5.38%. Investors who are holding for a decent yield and slow-and-steady income increases can be happy with the result, but I think investors looking for more income or looking to beat the market could do better elsewhere.
