LIC/LIT dividends flow for shareholders

Claire Aitchison

Independent Investment Research

In this edition of the IIR LMI monthly update, we take a look at the key news for the sector in February as well as take a look at the 1H'FY22 dividends/distributions declared/paid. 

It has been a volatile start to the new year with inflation, war and environmental disasters dominating the headlines. This has been reflected in the NTAs and share prices of LMI's and no doubt will be the talking points over the next few months. First things first, the 1H'FY22 reporting period has come to a close and LIC/LIT share/unitholders were rewarded with uplifts in dividends/distributions. After reducing the interim dividend in FY21 on the back of reduced income from investments, BKI increased its interim dividend to 3.5 cents a share (not including the 0.5 cps special dividend), a 75% increase on the prior corresponding period. Ex the special dividend, this is very close to the interim dividend levels in FY20. After a prolonged period of declining dividends, DJW declared an uplift of 28.6% to 6.8cps. While still significantly below the previous highs, the uplift is positive news for shareholders.

AMH’s interim dividend was of note, given it was is only the second interim dividend declared in the last 10 financial years and is the first dividend paid since the Board revised the dividend payment policy.

There were a number of LICs/LITs that increased their interim dividends by 100% or more, including CDM, PGF, FPP, VG1, LSF and RF1. We note that RF1 is a LIT and therefore distributions will be dependent on the realised capital gains and income earned during any given period. VG1 and LSF posted the greatest uplifts with a 200% and 166% increase in the interim dividends, respectively. LSF has significant dividend coverage based on the profits reserve on 31 December 2021.

There were a number of LICs/LITs that paid an inaugural interim dividend, including CDO, which paid a fully franked dividend of 7.5cps after only listing in November 2021. Upon listing the Company had an existing profits reserve and franking credit balance which has allowed the Company to declare a dividend so soon after listing.      

The attached report provides all the latest news as well as a detailed look at the 1H'FY22 dividends/distributions landscape. 

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Claire Aitchison
Head of Equities & Funds Research
Independent Investment Research
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