86.6% of LICs/LITs maintained or increased dividends and distributions for FY22

The FY22 earnings season wrapped up at August-end. 

The FY22 LIC and LIT Review looks at the LIC and LIT share/unit price and pre-tax NTA/NAV performance for the financial year period ending 30 June 2022 (FY22), as well as looking at the dividends/distributions declared for the period and dividend coverage of the LICs.

The broader Australian and global markets increased during the 1H’FY22, however declined in the 2H’FY22 as the economic landscape changed. 

Inflationary pressures, war and the increased probability of a recession all contributed to the sell off. Growth and small cap stocks were hit hardest by the market downturn, which is reflected in the performance of a number of LICs and LITs.

From a dividend/distribution perspective, share/unit holders fared well for the FY22 period with 86.6% of LICs/LITs either maintaining or increasing their ordinary dividends/distributions.

 We note that the trust structure of LITs means that they are required to pay out all income and realised capital gains generated in any given year. As such, distributions will be dependent on the performance of the portfolio in any given year which can lead to high levels of distribution volatility. This compares to the company structure of LICs, which allows them to reserve income and capital gains for future dividend payments.

Download the full review below.