Is the Argo Investments Limited (ASX: ARG) share price a buy?
Argo is an Australian listed investment company (LIC) which aims to maximise long term returns to shareholders through a balance of capital and dividend growth. Argo was established in 1946 and now has over 86,000 shareholders and a market capitalisation of $5.7 billion.
Is The Argo Share Price A Buy?
Every month Argo releases an update to the market informing investors about its net tangible asset (NTA) backing per share. In other words, Argo tells investors what it’s underlying value per share is.
Argo also informs the market about what its 20 largest investments are, which looks similar to the ASX 20 but with some differences.
According to Argo, at the end of May 2019, 5.5% of the portfolio was allocated to Westpac Banking Corp (ASX: WBC), 5% was allocated to BHP Group Ltd (ASX: BHP), 5% was allocated to Macquarie Group Ltd (ASX: MQG), 4.6% was allocated to Australia and New Zealand Banking Group (ASX: ANZ) and 3.8% was allocated to CSL Limited (ASX: CSL).
Cash and term deposits made up 3.7% of the portfolio at the end of May 2019.
What Is The Attraction Of Argo?
Argo has paid dividends every year since inception and in the last 12 months it has paid 32 cents per share of dividends, which equates to a fully franked dividend yield of 4%, which isn’t too shabby in this era of low interest rates.
The LIC is also internally managed and does not charge fees to shareholders, which helps to maintain low operating costs. For the 2018 financial year total operating costs were 0.15% of average assets at market value, which is very low.
Time To Buy Argo Shares?
The NTA was $8.24 before tax and $7.24 after tax, so it’s trading at a 4% discount to its pre-tax underlying assets. It’s not a bad time to buy but I might prefer to invest in BetaShares Australia 200 ETF (ASX: A200) or even better, one of the reliable ASX shares in the free report below.
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