I think that at this Pengana International Equities Ltd (ASX: PIA) share price, it could make a good ASX dividend share investment.
What is Pengana International Equities?
This is a listed investment company (LIC) offered by the fund manager Pengana Capital Group Ltd (ASX: PCG).
It describes itself as the largest ethical LIC on the ASX. The portfolio is focused on global businesses that meet the investment team’s high quality and durable growth criteria at reasonable prices.
There are four investment criteria it looks for: competitive advantages, quality management, financial strength and sustainable growth potential.
Every month, it reveals its top holdings. At the end of June 2021, in alphabetical order, those were: Alphabet, Amazon, Deere & Co, Facebook, First Republic Bank, Illumina, Microsoft, PayPal, SVB Financial and Wuxi Biologics Cayman.
Why is it a good ASX dividend share idea at the current Pengana share price?
There are a few different reasons why I think the LIC could make a good dividend option.
Firstly, before we get to dividends, I want to ensure that total returns may be satisfactory. I wouldn’t want to buy something just for yield. But remember, investment returns aren’t guaranteed and past performance shouldn’t be seen as a reliable indicator of future performance.
But outperformance is positive if it’s over the longer-term. Over the last three years, the LIC has outperformed the global index by an average of 0.7% per annum. The portfolio seems to be high-quality with good growth potential.
Yesterday, the business announced a quarterly dividend of 1.35 cents per share. That was an 8% increase of the 1.25 cents per share declared in the previous quarter. The board expects this will be the new quarterly dividend going forward.
At the latest Pengana share price, it offers a fully franked dividend yield of 3.8%.
But the LIC also said that it has the profit reserves to sustain an annual dividend of 5.4 cents per share for 11 years.
The board believes that the LIC can be one of the most reliable investment vehicles in the Australian market for the generation of stable and secure franked dividends.
I think it could be one to watch over the longer-term, particularly as a solid dividend idea.
