TLC LONGS, page-42

A little Friday non-pub cheer from Livewire:

The Lottery Corporation (ASX: TLC)

Ally Selby: Al, can you beat that? What's your sustainable dividend payer today and why?

Alastair MacLeod (BUY): We talked about Tabcorp before, and I'll point to the spin-off, The Lottery Corporation. It's actually a stock that hasn't paid a dividend yet and is not likely to in the next six months because a lot of the profits are still going back to Tabcorp. But looking forward, this is a regulated monopoly. It's expected to have around a 4% yield. If you think about the lottery business, most people know when you're buying a lottery ticket, it's a bit of a mug's game. So the same logic goes, selling lottery tickets is a great business. If you look at the cash flows of this company, depreciation's higher than CapEx. So cash flows are bigger than earnings. So from an income investor's perspective, your cash flows can be 130% of what your profits are. I think there's a lot of runway for this stock from a dividend growth perspective in a very economically defensive environment or position.

Now, onto Friday pub cheer!

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