Don’t discount LICs yet: Premium
Listed investment companies (LICs) have a strong future going forward, with changes to the Corporations Act favouring investors, Premium Investors chairman Tom Collins has claimed.
The firm announced strong results this week, reporting a net profit after tax of $18.1 million for the year ending 30 June and a final dividend of 3.5 cents per share, taking the full year dividend to 8.5 cents. This represented a cash yield of 12.2 per cent of current share price. Last year, the firm saw a loss of $39.4 million.
Collins said the removal of the prohibition from the Corporations Act on a company paying dividends to shareholders while retained earnings were negative and the company reported a loss in financial period have ensured LICs are now in a stronger position to satisfy shareholders. Collins added that the banning of trail commissions as stipulated in the Ripoll Review would also enhance the appeal of LICs, making them easily accessible liquid investments.
Premium was the second best performing LIC in research carried out by research house Independent Investment Research (IIR). Findings released by the firm showed a portfolio decline of 4.7 per cent, taking the 12-month portfolio return to 16.3 per cent.
The report showed that the majority of listed investment companies were trading at a discount to pre-tax NTA at the June quarter end. However, it added that as a group, the discounts to pre-tax NTA for LICs tightened, with only four of the 12 LICs covered experiencing a widening in the discount.
AUTHOR
Angela Faherty
Recommended for you
Sequoia Financial Group has announced it is selling off its Informed Investor subsidiary which it acquired in April 2022.
Wealth Data has examined which advice business model has seen the most growth since the start of the year including those that offer holistic advice.
Research conducted by Elixir Consulting and Lonsec has quantified the efficiency gains of using managed accounts in financial advice practices in hours per week saved.
With only one-quarter of advice practices actively seeking feedback from clients, the Financial Advice Association Australia has emphasised why this is a critical tool for client retention.
