Milton Corporation Limited (ASX: MLT) has just reported its FY19 result, is it the best listed investment company (LIC) for dividends?

Milton Corporation is a listed investment company (LIC) which has been operating since 1938 and listed on the stock exchange in 1958. Milton invests on behalf of its shareholders into other shares on the ASX and is internally managed by directors and management – this structure keeps costs lower. It aims to pay a fully franked dividend every year to pass through most of the investment gains to shareholders.

Milton’s FY19 Result

Milton reported a 13.6% increase in net profit after tax (NPAT) to a record $147.7 million for FY19. Profit per share (EPS) increased by 12% to 22.19 cents.

However, the above numbers include the significant special dividends that the company has received. Underlying profit, which excludes special dividends received, increased by 3.7% to $133.6 million with underlying EPS increasing by 2.4% to 20.08 cents.

The reported result included $14.1 million of special dividends, which includes special dividends from BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO), Wesfarmers Ltd (ASX: WES), Telstra Corporation Ltd (ASX: TLS) and DuluxGroup Limited (ASX: DLX).

Milton said that its reported net tangible assets (NTA) – its underlying value – grew by 4% to $4.92 in 2019 with total assets increasing to $3.3 billion from $3.1 billion with no debt.

The management expensive ratio, a key aspect of Milton’s investment performance, was 0.14% at 30 June 2019.

Milton’s FY19 Dividend

Milton’s full year dividends amounted to 21.9 cents per share, which was up 15.3%. This includes a 2.5 cents per share special dividend. Therefore, the ordinary dividend increased by 2.1% to 19.4 cents.

Is Milton A Buy?

Including the franking credits but excluding the special dividend, Milton has a dividend yield of 5.7% and it’s trading at a slight discount to the NTA at 30 June 2019. Despite these attractive qualities, I’m not looking at Milton for my own portfolio, although I can see why Milton would suit retiree portfolios for the consistent income.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.