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Why I just added the LIC Pengana (ASX:PIA) to my dividend watchlist

I think that at this Pengana International Equities Ltd (ASX:PIA) share price, it could make a good ASX dividend share investment.
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Jaz Harrison

Jaz is a Staff Writer for Rask. She is a keen investor who loves to thoroughly poke holes in an investment idea before it has a chance of making it into her portfolio. Jaz invests for the long-term and doesn't sweat the small stuff. She strongly believes that empowering people with knowledge is the best way for them to take charge of their finances, which is exactly the approach she takes with her own money and investments.
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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.

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Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

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

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