I'm always on the lookout for a good listed investment company (LIC) that offers good dividend income, good returns and a reasonable fee structure.
Future Generation Investment Company Ltd (ASX: FGX) is one of my favourite options because it ticks all the boxes in my opinion:
- Fees
Future Generation charges no management fees or investment fees, despite investing in the funds of top Australian-focused fund managers such as Paradice and Bennelong.
Instead, it donates 1% of NTA to charities that help the youth. This is a very worthy cause.
So, if the underlying portfolio outperforms the S&P/ASX All Ordinaries Accumulation Index then there aren't any outperformance fees.
- Performance
Over the past year its portfolio grew by 16.4%, outperforming the benchmark by 1.7%. Since inception in September 2014 its portfolio has outperformed the benchmark by an average of 3.1% per annum.
Whilst this isn't a huge outperformance the differential can turn into a substantial amount of money when compounded over a number of years.
- Dividend income
One of Future Generation's main aims, besides supporting charities, is to provide an increasing stream of fully franked dividends.
Future Generation has increased its dividend each year since 2015 and currently offers a grossed-up dividend yield of 5%.
Share purchase plan
There is a SPP currently going ahead which allows existing shareholders to buy up to $15,000 of shares of Future Generation without the cost of brokerage. Hopefully this can raise a good amount of money which will increase the annual donation pool.
Foolish takeaway
Future Generation is a very worthwhile investment – both for the donations and the investment returns.
I like that it offers a lot of diversification through the underlying funds and hopefully it can keep steadily increasing the dividend over the long-term.
