AFIC Reports $285M Profit, Declares 19.5c Dividends Including 5c Special

Financial Highlights and Dividend Strategy

Australian Foundation Investment Company Limited (AFIC) has released its full-year results for the year ended 30 June 2025, reporting a net profit of $285.0 million, a modest 3.9% decline from the previous year. Despite this, the company has maintained its final dividend at 14.5 cents per share, fully franked, and declared a special dividend of 5 cents per share. This special dividend reflects realised capital gains and franking credits primarily from trimming its substantial holding in Commonwealth Bank of Australia.

The total dividend payout for the year now stands at 31.5 cents per share, fully franked, marking a significant 21.2% increase over the prior year. AFIC’s management expense ratio remains low at 0.16%, underscoring its commitment to cost-efficient portfolio management.

Portfolio Performance and Market Context

AFIC’s investment portfolio returned 10.7% for the financial year, underperforming the S&P/ASX 200 Accumulation Index, which returned 15.1% including franking credits. The underperformance was influenced by sector dynamics, notably the strong rally in gold stocks; a sector AFIC traditionally avoids; and the trimming of bank holdings, particularly Commonwealth Bank, which had been trading at elevated valuations.

While some quality holdings such as JB Hi-Fi, Wesfarmers, and Coles Group outperformed the market, others like ARB Corporation, James Hardie Industries, CSL, and Reece Limited lagged. AFIC remains confident in the long-term prospects of these companies despite short-term market headwinds.

Strategic Portfolio Adjustments

During the year, AFIC made several notable portfolio changes. It fully exited positions in Mineral Resources, Ramsay Health Care, and Domino’s Pizza Enterprises, citing structural challenges and increased competitive pressures in these sectors. Conversely, the company initiated new positions in BlueScope Steel, Sigma Healthcare, Telix Pharmaceuticals, and Worley, reflecting a strategic pivot towards companies with promising growth drivers and more favourable market conditions.

AFIC’s global portfolio, a smaller component representing about 1.6% of total assets, delivered a 14.0% return, though this was below its benchmark. The company continues to evaluate the best approach to expanding its global investment footprint.

Outlook and Governance

Looking ahead, AFIC acknowledges the uncertain economic environment marked by softening consumer confidence and volatile geopolitical conditions. The company emphasizes a disciplined, fundamentals-driven investment approach, focusing on quality companies capable of delivering sustainable income and capital growth over the medium to long term.

AFIC will host a shareholder webcast on 28 July 2025 to discuss these results and will hold its Annual General Meeting on 30 September 2025. Investors are encouraged to engage with management for further insights.