Perpetual Equity Investment Company Limited reported a net profit of $21.7 million for FY25 and maintained its fully franked dividend at 8.0 cents per share, matching last year’s payout despite portfolio underperformance against the benchmark.
- Net profit after tax of $21.7 million for FY25
- Fully franked total dividend of 8.0 cents per share, consistent with FY24
- Dividend yield of 6.6%, grossed-up yield of 9.4%
- Portfolio returned 6.5% versus benchmark’s 13.7% in FY25
- Profit reserve of $67.8 million provides 2.2 years dividend coverage
Steady Dividends in a Mixed Market
Perpetual Equity Investment Company Limited (ASX – PIC) has delivered a net profit after tax of $21.7 million for the financial year ending June 30, 2025, alongside a fully franked final dividend of 4.0 cents per share. This brings the total dividend for FY25 to 8.0 cents per share, unchanged from the previous year and marking the highest consistent payout since the company’s inception.
Chairman Nancy Fox AM highlighted the company’s commitment to providing a reliable income stream for shareholders, noting that the dividend yield of 6.6% compares favourably to the broader market’s 3.2% yield as represented by the S&P/ASX 300 Accumulation Index. The grossed-up dividend yield, which accounts for franking credits, stands at an attractive 9.4%.
Portfolio Performance and Strategic Positioning
Despite the steady dividend, PIC’s investment portfolio returned 6.5% over the year, underperforming the benchmark’s 13.7% gain. Portfolio Manager Vince Pezzullo acknowledged the challenges posed by market concentration and elevated valuations in defensive sectors, which have driven momentum-based share price movements and created a wide dispersion beneath headline index returns.
Pezzullo emphasized the company’s value investing philosophy, focusing on identifying opportunities where market prices diverge from intrinsic value. The recent appointment of Sean Roger as Co-Portfolio Manager is expected to strengthen the team’s ability to navigate these market dislocations and generate medium to long-term returns.
Financial Resilience and Dividend Coverage
With a profit reserve of $67.8 million after accounting for the final dividend payment, PIC maintains a robust buffer equivalent to 2.2 years of dividend coverage. This financial strength underpins the company’s ability to sustain dividend payments even amid market volatility, though future dividends remain at the discretion of the Board.
The portfolio remains predominantly invested in Australian listed securities (74.4%), with nearly 20% allocated to global equities and a modest cash position of 5.9%, reflecting a balanced approach to risk and opportunity.
Looking Ahead
As PIC approaches its upcoming Annual General Meeting on October 30, investors will be watching closely for any updates on portfolio strategy and dividend policy. The company’s long-term track record of delivering fully franked dividends and managing shareholder capital prudently provides a foundation of confidence, even as market conditions remain uncertain.
Bottom Line?
Perpetual Equity’s steady dividends and strong reserves offer reassurance, but portfolio underperformance signals a watchful eye on future market shifts.
Questions in the middle?
- How will PIC’s value investing strategy adapt if market momentum continues to dominate?
- What impact will the new co-portfolio manager have on future returns and portfolio composition?
- Will the Board maintain the current dividend level if market conditions deteriorate further?