ASX Dividend Aristocrats

Name: Milton Corporation Limited
ASX Code: MLT
Founded: 1958
Dividend yield: 4.12%
Market Cap: $3.02 Billion
Price: $4.60
Pre – Tax NTA (14th August): 4.65
Premium/Discount: 1.1 % Discount

Milton Corporation is a conventionally structured Listed Investment Company that was established as a private investment company for four shareholders in 1938. It became a public company in 1950 and listed on the Sydney Stock Exchange in 1958. Milton is now an investment company for more than 25,800 shareholders and is listed on the Australian Securities Exchange under the code MLT. Milton is largely controlled by the Milner family (R.D Milner is the Chairman) who are major shareholders and also has large cross holdings from ARGO, AFIC and BKI investment companies which are part of the same management stable.

How does Milton Corporation Invest?

Milton states it has three main objectives for the shareholders of the firm;

1) Increase fully franked dividends paid to shareholders over time

2) Provide capital growth in the value of the shareholders’ investments

3) Invest in a diversified portfolio of assets which are predominantly Australian listed companies and trusts

To do this Milton is predominantly a long term investor in companies and trusts listed on the ASX that are well managed, with a profitable history and an expectation of increasing dividends and distributions. The vast majority of Milton’s investments are listed in the ASX 50 (i.e the top 50 largest stocks by market capitalization) indicating that they are large businesses. Turnover of investments is low and capital gains arising from disposals are reinvested back into the portfolio. Milton costs represent 0.14% of assets under management – extremely low for active portfolio management.

Milton also holds liquid assets such as cash and term deposits (approximately 5% of current portfolio) and it may invest in hybrid securities as well as real property development through joint ventures. Currently however the vast majority of the companies assets are in listed Australian companies.

The sector breakdown of the portfolio is below;

Compared to the ASX200 sector breakdown, Milton is overweight financials and underweight the Materials sector (mining) substantially, approximately 8% difference.

The all time dividend history of Milton is below. Milton generates dividends by capital gains on investments and also passing on dividends received from underlying holdings. All dividends of Milton have been fully franked and the company expects to continue to pay fully franked dividends moving forward.

The long term performance of Milton is below. The effect of franking credits has not been included in the composition of this chart.

ASX dividend Aristocrats Conclusion

Milton is a long standing listed investment vehicle that has low costs (0.14% of assets under management) and a good track record of delivering solid long term performance that largely matches the All Ordinaries index. As with most large LICs, their asset base prevents them from trading too frequently or investing in smaller stocks as their flow of capital would move prices against themselves. Consequently their investment approach is  ‘steady as she goes’ and focuses predominantly on industrial stocks that have good dividends and consistent revenue streams. Miltons ability to consistently pay fully franked dividends makes it very attractive to investors who can take full advantage of the franking credits, such as pension phase super funds. An investment in Milton would form a good base to any investment portfolio, giving it a strong platform to grow from and potentially to add more aggressive investments around.

This information is general in nature and not intended to be personal financial advice.