Regal Asian Investments Boosts Dividend Target to 6 Cents Semi-Annually

Dividend Policy Update Reflects Financial Strength

Regal Asian Investments Limited (ASX:RG8) has announced an upward revision to its dividend policy, now targeting at least 6 cents per share on a semi-annual basis, up from the previous 5 cents. This adjustment underscores the company's confidence in its financial position and commitment to delivering consistent returns to shareholders.

The decision follows a strong profits reserve balance of $110.7 million as of 31 December 2024, equating to approximately 72.8 cents per share. After accounting for the recently declared dividend, this reserve still covers over five years of dividend payments at the new rate, providing a solid buffer that supports dividend stability and potential growth.

Yield and Franking Benefits Enhance Investor Appeal

At the current share price of $2.18, the new dividend target translates to a 5.5% annualised yield before franking credits. When fully franked, the grossed-up yield rises to an attractive 7.9%, enhancing the income appeal for Australian investors who can benefit from franking credits. The Board has expressed its intention to maintain dividends fully franked to the fullest extent possible, reinforcing the company’s focus on tax-efficient shareholder returns.

Since initiating dividend payments in 2021, RG8 has distributed a total of 41.5 cents per share, predominantly fully franked, demonstrating a consistent track record of rewarding investors. This history, combined with the updated policy, positions RG8 as a compelling income-focused investment within the listed investment company (LIC) sector.

Strategic Management and Portfolio Outlook

RG8’s portfolio management transitioned to Regal Funds Management in mid-2022, bringing specialist alternatives expertise to the company’s concentrated Asian-focused investment strategy. Leveraging a fundamental, bottom-up approach, the portfolio combines long and short positions to navigate the dynamic Asian markets. The dividend policy update may also reflect confidence in the portfolio’s ongoing performance and the ability to generate sustainable profits.

Investors should note that while the profits reserve provides a strong foundation, future dividends remain subject to market conditions and the company’s financial results. The Board’s commitment to growing dividends over time suggests a positive outlook but also warrants close monitoring of upcoming earnings and market developments.