ASX dividend stocks: A 12-13% yield is up for grabs
Helia is set to deliver a 12-13% dividend yield next month, as the company continues to return excess capital to shareholders.
Source: iStock
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KEY POINTS
- Helia's FY25 total dividend of $343 million equates to 100% of statutory net profit plus roughly $100 million in additional capital, implying a 12-13% yield at the current share price.
- The loss of CBA and ING, which together represented 61% of gross written premiums, is the primary driver of the structural revenue decline, with FY26 guidance pointing to a further 7% fall at the midpoint.
- Despite years of special dividends, Helia's capital ratio sits at 2.03x, well above its 1.40-1.60x target, meaning further capital returns are likely even as earnings shrink.
The story of Helia (ASX: HLI) has been a rather complicated one.
If I had to summarise the story so far in one sentence – Helia is a well-capitalised lenders mortgage insurance company that has lost several major customers, freeing up regulatory capital that is being returned to shareholders via large special dividends.
The stock rallied 16% on Wednesday after its FY25 result beat dividend expectations, with FY26 guidance coming in better than feared.
FY25 at a glance
All the below estimates refer to Macquarie forecasts from November 2025.
Insurance revenue down 4% to $371.5m vs. $363m ests (2% beat)
Gross written premiums up 23% to $240.0m
Underlying NPAT up 12% to $247.0m vs. $240.8m ests (2.5% miss)
Final ordinary dividend of 16 cps plus a special dividend of 67 cps vs. Macquarie ests of 16 cps ordinary and 60 cps special (9.2% beat)
FY26 insurance revenue guidance of $320-370m implies a further step-down from FY25 but above Macquarie ests of $319m (8.1% beat at the midpoint)
Full-year dividends totalled $343 million, equivalent to 100% of statutory net profit plus roughly $100 million in capital returned from the balance sheet. At the current share price, that implies a total yield of 12-13%.
Another massive dividend
Helia has yielded 12-19% every year since FY21, though the elevated yield reflects a business in structural decline, not one firing on all cylinders.
In March 2025, Helia confirmed that Commonwealth Bank would not be renewing its LMI contract beyond December 2025. CBA represented approximately 44% of Helia's GWP in FY24. Four months later, in July 2025, ING Bank notified Helia it would also proceed with an alternate provider. ING accounted for approximately 17% of FY24 GWP. Together, the two contracts represented roughly 61% of Helia's gross written premium base.
When an insurer loses new business, it requires less regulatory capital to support its book. That frees up excess capital sitting above the target range, and Helia is channeling it right back to shareholders via special dividends.
Even after all those years of special dividends, the company's "prescribed capital amount" ratio sits at 2.03x, well above its target range of 1.40-1.60x, and management has confirmed it will continue exploring options to return the surplus efficiently.
Revenue still heading lower
The GWP growth of 23% in FY25 reflects higher market share and increased lending volumes as Helia renewed five exclusive customer contracts during the year. However, it also includes CBA's full-year contribution, which ceases from FY26.
The First Home Buyers segment, which accounted for approximately 27% of GWP in FY25, faces further headwinds from changes to the Federal Government's 5% Deposit Scheme effective 1 October 2025, which is expected to remove the majority of first home buyers from the LMI market. Helia's FY26 insurance revenue guidance of $320-370 million represents a 1-13% decline from FY25, or a 7% decline at the midpoint.
That said, Macquarie's forecasts heading into the result was $319 million, so much better-than-feared.
The bottom line: Helia offers a unique value proposition over the next two to three years, with above-market yields funded by excess capital but earnings are widely expected to dwindle.
