Banks and other stocks with strong investment returns boosted Milton Corporation first half profit by 19.3 per cent to $54.6 million.

The listed investment company’s profit jump was driven by a 25-per cent increase in dividends and distributions from investments to $52.7 million from its bigger investments including Westpac, Commonwealth Bank and BHP Billiton.

A merger with Choiseul Investments in December 2010 expanded the number of Milton shares on issue.

This, along with a 6.5 per cent lift in earnings per share, resulted in a fully franked interim dividend of 38 cents per share, up one cent from a year ago.

Underlying operating profit rose 26.4 per cent to $54 million.

Total income increased 20 per cent to $59.8 million, thanks to the higher investment income from Milton’s $1.77 billion investment portfolio.

Milton says it will continue to target companies that are expected to pay dividends as the domestic economy slows, and it has $162 million in cash and liquid assets from which to acquire more investments.

“Milton is reasonably fully invested. However, it does have sufficient cash to enable it to participate in further opportunities as they arise,” managing director Frank Gooch said.

The company invested $31 million in 44 companies during the first half to December 31 and received $27 million for its holdings in companies subjected to takeovers.

Westpac was the company’s biggest investment at December 31, valued at $208.4 million.

Sydney-based Milton was founded in 1938 and listed on the local bourse 20 years later.

Milton’s shares rose 11 cents to $14.81.