One of the beauties of investing in Australian stocks on the share market is that, at least most of the time, investors are buying ownership stakes in companies that they know and trust.
Think of Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), Woolworths Group Ltd (ASX: WOW) or Harvey Norman Holdings Ltd (ASX: HVN). These aren’t just stock ticker codes; they are businesses we’ve known and occasionally visited all our lives.
But not all great investments are household names. One of my favourite Australian stocks is one that most people haven’t even heard of.
However, it does invest in the likes of CBA, Woolworths and Telstra itself. Let me explain.
The Australian stock goes by the name of Plato Income Maximiser Ltd (ASX: PL8). Plato is a listed investment company (LIC), which essentially means it is a company that invests in other companies.Â
In Plato’s case, it does so by owning an underlying portfolio of ASX shares, which are owned and managed on behalf of Plato’s shareholders. As the name implies, Plato constructs this portfolio with the aim of maximising dividend income for shareholders. You can see this in action with the company’s holdings.
These currently include the likes of Coles Group Ltd (ASX: COL), BHP Group Ltd (ASX: BHP), Fortescue Ltd (ASX: FMG), Macquarie Group Ltd (ASX: MQG), and Metcash Ltd (ASX: MTS). That’s amongst many others, including most of the names we touched on above.
Not only does this dividend stock utilise its holdings to pay out a relatively high dividend, with full franking credits attached, but it does so on a monthly basis. Yes, this is one of the ASX’s rare monthly dividend payers.
What makes Plato a top Australian stock?
I was lucky enough to pick up shares of this Australian stock when it was trading with a dividend yield of close to 6%. Today, recent share price appreciation has reduced this yield to a still-respectable 4.65% or so.
However, I don’t invest in Australian stocks solely for the purpose of generating income. Overall returns matter more to me than a high upfront dividend yield. But Plato shines in this arena as well. The company’s portfolio returns have been 10.7% per annum since its inception in 2017 (as of 31 October), outperforming the S&P/ASX 200 Index (ASX: XJO)’s 10.5%.Â
As such, I regard Plato as a top income investment on the ASX, and put it forward as quite possibly the best Australian stock you’ve never heard of.Â
The post The best Australian stock you’ve never heard of appeared first on The Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen has positions in Plato Income Maximiser. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group. The Motley Fool Australia has positions in and has recommended Harvey Norman, Macquarie Group, Telstra Group, and Woolworths Group. The Motley Fool Australia has recommended BHP Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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