FY24 Summary:
- A fully franked dividend of 4.0 cents per share for 2H24, consistent with the FY23 final dividend and 1H24 interim dividend
- Record FY24 full year fully franked dividend of 8.0 cents per share equating to an annual dividend yield of 6.5% and a grossed-up dividend yield of 9.3%1;
- Net profit after tax of $28.6 million, and the Company’s profit reserve of $82.5 million providing for 2.7 years dividend coverage after the payment of the final dividend2
- Delivering to the Company’s investment objective with five year investment performance of 10.4% p.a. outperforming the benchmark by 3.2% p.a .
Perpetual Equity Investment Company Limited (ASX:PIC; the Company) announces a net profit after tax of $28.6 million for FY24 and a fully franked 2H24 dividend of 4.0 cents per share which is consistent with the 2H23 final dividend and 1H24 interim dividend.
PIC Chairman Nancy Fox said, “The FY24 full year fully franked dividend of 8.0 cents per share surpasses the total dividends per share paid to shareholders in previous years and equates to an annual dividend yield of 6.5% and grossed up yield of 9.3%1. This compares favourably to the trailing 12 month dividend yield of the S&P/ASX 300 Accumulation Index which was 3.7% as at 30 June 2024.4
“In a period of broader macroeconomic and geopolitical uncertainty and change, the Board sees a growing need for high quality investments and a reliable income stream from its shareholders. We believe our careful management of the Company’s capital position aligns with the interests of our shareholders, and we are confident the Manager’s skill and active approach to investing shareholder capital will continue to contribute to the longer-term success of the Company.
After the payment of the 2H24 dividend, the profit reserve for the Company sits at $82.5 million which provides for 2.7 years dividend coverage2. The Company’s franking account balance is $12.7 million after the payment of the final dividend and provides for one year of fully franked dividend coverage. This means we are well poised to continue our trajectory of paying dividends in the long run, adding to the $168.4 million or 53.8 cents per share that has been paid in dividends since the Company listed in 2014.5
PIC performance and market conditions
For the 12 months to 30 June 2024, the PIC portfolio returned 7.7%4 whereas the S&P/ASX 300 Accumulation Index (benchmark) returned 11.9%.
“Although relative performance for the PIC portfolio was under the benchmark, the Board believes the Manager’s focus on quality and value will deliver over the long-term, including generating dividend income and capital growth for shareholders.
“The Company is designed as a long-term proposition and in line with the Company’s investment objective, the PIC portfolio has returned 10.4% p.a.4 over five years, outperforming the benchmark by 3.2% p.a.” said Ms Fox.
PIC Portfolio Manager Vince Pezzullo said: “We saw the S&P/ASX300 at or near all-time highs with growth stocks rallying in tandem. However the broader outlook remains clouded by uncertainty over factors such as inflation, interest rates, political elections and consumer pressure. Investors are still uncertain as to whether the final outcome will be a recession, a soft landing or an economic rebound.
“Valuations of growth stocks including technology companies are approaching their peak and as markets increasingly focus on the direction of the economy, we see the need to focus on fundamentals, quality and value. We see substantial value opportunities that may be underappreciated and currently out of favour and we believe in the coming months there will be an inflection point where these become pivotal in driving outperformance against the benchmark.
“Irrespective of the noise or hype in certain sectors or markets, quality businesses remain quality businesses and we remain disciplined about the prices we pay for these investments. This strategy has been, and will continue to be, crucial in consistently delivering superior returns over time.”
As at 30 June 2024 the portfolio held 82.7% in Australian listed securities, 13.0% in global listed securities and 4.3% in cash.
1Yield is calculated based on the total dividends of 8.0 cents per share and the closing share price of $1.235 as at 30 June 2024. Grossed up yield takes into account franking credits at a tax rate of 30%.
2Profit reserve of $82.5 million as at 30 June 2024 after taking into account the estimated payment of the final dividend. This equates to 21.7 cents per share and represents 2.7 years dividend coverage assuming a total dividend payment of 8.0 cents per share per annum. This does not take into account any changes to share capital. No representation is made in relation to the payment of future dividends, which will be at the discretion of the Company’s Board.
3The benchmark is the S&P/ASX 300 Accumulation Index. Returns have been calculated on the growth of Net Tangible Assets (NTA) after taking into account all operating expenses (including management fees) and assuming reinvestment of dividends and excluding tax paid. Any provisions for deferred tax on unrealised gains and losses are excluded. Past performance is not indicative of future performance. For details of the Company’s investment performance, please visit https://www.perpetualequity.com.au/tools-and-resources/research-reports
4Source: Factset.
5Includes the fully franked 2H24 dividend of 4.0 cents per share declared by the Board on 26 August 2024 and to be paid on 8 October 2024.