LIC & LIT Listed Investment Companies (LICs) 2019

Thanks @Nodrog

Its still possible they run out of cap gains. So then is it just return of capital in the form or a dividend?

In that case they may have to slowly liquidate some holdings to continue payments, wouldn’t they? Which is far from ideal because in that scenario the market would be likely struggling.

Not likely but ultimately still a risk that the pass thru LICs don’t have.

Or is there something else I’m missing?

 

So PMC dividends are largely capital. A company receives no CGT discount. I’d rather
create those “dividends” by taking the natural yield from an index and then topping up by selling the required amount, taking the CGT discount on the capital component.

 

Right. OK, I get it now, the penny has now dropped. Thank you.

 

If reserves get depleted and in the absence / reduction of trading profits and other income the dividend will likely be significantly cut or not paid at all. Of course there’s the option of return of capital which is far from ideal if needing to liquidate holdings in an awful market.

Some research / broker reports periodically provide dividend cover data for those who can’t or can’t be bothered working it out themselves.

Here’s a few LMI reports which have discussed the issue in the past:

https://www.nracapital.com/sgxmas/lic 5 oct 2016.pdf

https://dpsi7pmz5b6vt.cloudfront.ne...ture/132/Monthly_LIC_Report_February_2017.pdf

https://dpsi7pmz5b6vt.cloudfront.net/uploads/ckeditor/picture/4291/Monthly_LIC_Report_March_2018.pdf

I’m no expert on such things as I’m allergic to Company Reports and data in general. With trading LICs I just work on the assumption that anything could happen to the dividend including being suspended for a period. Hence long live the cash buffer.

 

DUI got a little bit of love. Good or bad decision? Haven't the foggiest but it'll use some of the STW and VGS distributions whenever they are due to be paid.

 

Lucky you didn’t get booked.

 

Lol that’s exactly what I was trying to say to @DoggaPP ...and obviously did a terrible job of it!!

Lucky I don’t write for a hobby/work. Wait...

 

Join the club. I tried to answer the OP’s earlier question but was unsuccessful. @The Falcon, wordsmith extraordinaire, came to the rescue thankfully. Never been great at written communication myself. That’s why I chose to be an IT programmer when working.

I have to say though having followed your blog that you’re writing skill has hugely improved and blog posts are very pleasant to read. It will continue to get even better as you work on that book.

 

Too kind. I am a mere dribbler, but saw an opportunity to cut through. The older I get the more clear it is that most is just packaging, or baloney.

 

Not true - I'm just a bear of little brain and it takes a while for me to find the light switch sometimes!

For the record, I appreciate your blog and your short writings at the Fool too.

 

Thanks for the encouragement, and @Nodrog too, sincerely appreciated.

 

So do I. I also think it's great that you reply to all the comments.

 

Haha no problem. I think it’s great that people actually read it!

 

I had trouble reading your latest blog post. I cried when I read how little was allocated to beer in your budget. Too emotional to continue reading after that.

 

Maybe that’s something I’ll get better at with time...

Goals for 2025: less reading, more drinking!

 

More tears, but tears of joy this time. Hope in humanity has been restored:

 

What are people's opinions on holding VAE or similar as a long term investment, and do you?

My wife and I are both 36, and have good Aussie LIC exposure along with IOZ and IWLD (essentially the same as having VAS and VGS). It occurred to me that we have zero exposure to Samsung, Huawei and other market giants. Simplicity is a good thing, but I'm also getting a taste of FOMO.

 

A $40bn LIC reset could be required if Labor takes power — Wilson Asset Management

 

VAE has been discussed quite a bit previously. The following search might be useful:

Search Results for Query: Vae | PropertyChat

I don’t own VAE but a number of others here do. If I was your age I would strongly consider VAE / VGE for our portfolio but at our age now and being retirees it’s not of interest.

 

I'd be more inclined to round out with Emerging Markets rather than a geographic sector.