Dividend Detective – BKI INVESTMENT COMPANY LIMITED

Wednesday, November 23rd, 2011

The following article by Adrian Ezquerro featured in The Australian, 23 November 2011.

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BKI INVESTMENT COMPANY LIMITED
ASX code: BKI
Share price: $1.17
Industry: Diversified Financials
FY2011 Dividend: 6.25 cents (fully franked)
Forecast FY2012 Dividend: 7.25 cents (fully franked)

BKI Investment Company Limited (ASX code: BKI) is a listed investment company that invests in a diversified portfolio of Australian shares, trusts and interest bearing securities.
The company’s stated key objective is to generate an increasing income stream for distribution to its shareholders in the form of fully franked dividends.

In addition to the focus on income, BKI management also seek to invest in companies with a competitive advantage, strong balance sheet and sound management, at a price below their estimated valuation.

BKI’s recent outperformance was recognised at the 2011 Morningstar Fund Manager of the Year awards, in being named the 2011 listed investment company of the year.
BKI’s AGM presentation highlighted their belief that the current market remains an opportunity for longer term investors, and that the balance sheets of quality companies are more robust than ever. This is reflected in their portfolio movements, with BKI making major investments in a range of companies including Commonwealth Bank, Telstra and Fleetwood Corporation.

Discussions relating to the possible sale of Hew Hope Corporation (NHC) also heavily impact BKI. With almost 15% of their portfolio in NHC, BKI would directly benefit from any further premium extracted through the formal bidding process announced in early October.
Management quality is a further strength of BKI. The heavy influence of the Millner family is a positive for shareholders; their management experience has indeed benefitted long term holders of both Washington H. Soul Pattinson (SOL) and Brickworks (BKW).

BKI recently declared a fully franked dividend of 4 cents per share. This continues a very consistent track record of paying a healthy level of dividends, even through the GFC. This, coupled with an abundance of franking credits, makes BKI a worthwhile consideration for a more income conscious investor.

The pre-tax net tangible asset (NTA) backing of BKI is currently $1.37 and purchase at the current market price would present an investor with an attractive yield in excess of 6% fully franked.

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