Milton Investment Corporation limited (ASX:MLT) is an Australian Listed Investment Company that’s been around since 1938. They invest mainly in Australian listed stocks which make up just over 90% of its entire assets, and have provided shareholders great returns according to their three key mission statements;
” To Increase fully franked dividends paid to shareholders over time ”
“To provide capital growth in the value of shareholders investments”
“To invest in a diversified portfolio of assets which are predominantly Australian Listed companies and trusts”Milton Investment Corporation Limited
From humble beginnings being incorporated in November 1938, to becoming listed on the ASX in 1958, Milton has grown to become the third largest Listed Investment Company in Australia, managing over (AUD) $3.1 Billion in funds.
in October 2021, Milton was acquired by Washington H. Soul Pattinson (ASX:SOL) and so was delisted and can no longer be traded. Milton shareholders were given a pro rata equivalent in shares of Washington H. Soul Pattinson (ASX:SOL). It probably makes sense to take down this review because of that, but for historical reasons I am going to leave it up as it probably explains a bit around my understanding of LICs at the time it was written.
Milton has a diversified portfolio of listed companies and trusts as well as other interest producing securities and real estate properties. Milton’s team of professionals review its portfolio and make recommendations to its investment committee of four directors. Because it is managed by a small team, Milton has a very low annual management expense ratio of .14% ($14 per $10,000 invested per year).
Milton has a large holding in Banks and other financial stocks, and otherwise holds a very diversified portfolio as shown in the breakdown below:
Milton has provided investment returns in line with the index over the long term. Below the total return of Milton is shown (blue is portfolio NAV, orange is share price) against the index. It is worth noting however, that the graph below does not include the effects of franking on returns. By passing on reliable fully franked dividends, Milton shareholders have benefited from Australian tax law franking credits and franking refunds. This is because franked returns come with a 30% corporate tax rate credit, and those on higher tax brackets simply pay a ‘top up’ tax and those on lower tax brackets get a refund for the difference.
Milton is sitting on a franked dividend yield of 4.62% which is grossed up to 6.6% when accounting for the franking (Aussie tax break credit system). They have a strong history of increasing dividends and as shown below the dividend yield has increased consistently every year since the GFC. Prior to that, they had accelerated significantly, so the correction of the GFC saw this return to more sustainable levels.
Apart from the amazing 6.6% grossed up dividend, Milton’s share price has also grown, making up the difference between the high dividend and the total shareholder return.
Financial Disclaimer: CaptainFI is NOT a financial advisor and does not hold an AFSL. This is not financial Advice!
I am not a financial adviser and I do not hold an Australian Financial Services Licence (AFSL). In this article, I am giving you factual, balanced information without judgment or bias, to the best of my ability. I am not giving you any general or personal financial advice about what you should do with your investments. Just because I do something with my money (or use a particular service or platform) doesn’t mean it is automatically appropriate for your personal circumstances. I do not recommend nor endorse any financial or investment product, and my usage or opinion of any product should not be interpreted as an endorsement, advertisement, or intent to influence.
I can only provide factual information based on my journey to Financial Independence, and that is provided for general informational and entertainment purposes only. I make no guarantee about the performance of any product, and although I strive to keep the information accurate and updated as it changes, I make no guarantee about the correctness of reviews or information posted.
Remember – you always need to do your own independent research and due diligence before making any transaction. This includes reading and analysing Product Disclosure Statements, Terms and Conditions, Service Arrangement and Fee Structures. It is always smart to compare products and discuss them, but ultimately you need to take responsibility for your use of any particular product and make sure it suits your personal circumstances. If you need help and would like to obtain personal financial advice about which investment options or platforms may be right for you, please talk to a licensed financial adviser or AFSL holder – you can take the first steps to find a financial advisor by reading this interview, or by visiting the ASIC financial adviser register and searching in your area.