LIC

BKI’s stimulus-led record result delivers major dividend boost

Wed 20 Jul 22, 10:33am (AEST)
Dividends

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Key Points

  • FY22 net profit after tax up 175%
  • Total dividends paid for FY22 up 73% on last year
  • Grossed up dividend yield is 7.4%

BKI Investment Company (ASX: BKI) was up 1.23% at the open after the large cap listed investment company (LIC) reported record full-year earnings boosted by higher dividend payouts by Australian resources, infrastructure and banking giants.

These included BHP (ASX: BHP), Rio Tinto (ASX: RIO) and Commonwealth Bank (ASX: CBA), New Hope (ASX: NHC), Woodside Energy (ASX: WDS), National Australia Bank (ASX: NAB) and Macquarie Group (ASX: MQG).

NPAT up 175%

For the 12 months through June, net profit after tax (NPAT), including special dividends [and off market buy‐backs] was $100.8m, up 175%, while total ordinary revenue grew 58% to $63.4m.

The LIC will pay a fully franked final dividend of 3.65 cents per share (CPS) and a special dividend of 1c, both on 30 August.

This takes total dividends paid for the full year to 8.65 CPS, up 73% on last year.

Tailwinds

Management attributes the record result to both stimulus-led economic tailwinds to households, consumers and businesses - which saw company profits improve and dividends paid by Australian equities increase significantly - plus significantly higher special investment, up from $1m to $42.7m.

Commenting on the result, management notes:

“These strong economic conditions prevailed throughout FY2022 which saw company profits improve and dividends paid by Australian equities increase significantly throughout the year.”

Sustainable dividends & pricing power

Portfolio manager Tom Millner notes the LIC's primary aim is to invest in businesses paying an attractive and sustainable dividend stream throughout the cycle.

“We will target those companies that have pricing power and the ability to pass on prices to their customers in this environment to ensure continued profitability, earnings growth and dividend growth for BKI shareholders,” he noted.

Since listing BKI has - including the payment of today’s dividends - now paid out $878m or $1.23 per share in dividends and franking credits to shareholders.

The current BKI grossed up dividend yield is 7.4%, based on a tax rate of 30% and a share price of $1.66.

Consensus does not cover this stock, which is up 0.62% over one year.

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BKI Investment Company share price: A 12 month snapshot.

 

Written By

Mark Story

Editor

Mark is an investigative financial journalist and editor who started his career working for Marathon Oil in London. He has a degree in politics/economics and a diploma in journalism. Mark has worked on 70-plus newspapers and financial publications across Australia, NZ, the US, and Asia including: The Australian Financial Review, Money Magazine, Australian Property Investor and Finance Asia. Mark is passionate about improving the financial literacy of all Australians through the highest quality content. Email Mark at [email protected].

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