Spheria’s Dividend Shift Raises Questions on Future Portfolio Performance
Spheria Emerging Companies Limited has announced its highest-ever quarterly dividend of 3.8 cents per share and revealed plans to transition to monthly dividends starting early next year, aiming to provide shareholders with more regular income.
- Record fully franked quarterly dividend of 3.8 cents per share for Q3 2025
- Dividend based on 1.5% of post-tax net tangible assets (NTA)
- Transition from quarterly to monthly dividends beginning in 2026
- Dividend reinvestment plan (DRP) available for current dividend but to be suspended after December 2025
- Portfolio underperformed Small Ords by 4.1% in the quarter due to gold sector gains
Record Dividend Marks a Milestone
Spheria Emerging Companies Limited (ASX – SEC) has declared a fully franked quarterly dividend of 3.8 cents per share for the period ended 30 September 2025, the highest quarterly payout in the company's history. This dividend, payable on 14 November 2025, reflects a steady increase in the dividend rate to 1.5% of post-tax net tangible assets (NTA), underscoring the company’s commitment to delivering consistent income to shareholders.
The dividend calculation is based on the company’s post-tax NTA of $2.536 per share as at 30 September 2025. Since transitioning from half-yearly to quarterly dividends in 2021, Spheria has progressively increased its payout ratio, a move that has been well received by investors, as evidenced by a notable reduction in the company’s discount to NTA.
Strategic Shift to Monthly Dividends
Building on the success of its quarterly dividend policy, Spheria has announced plans to move to monthly dividend payments starting in the first quarter of 2026. This change aims to provide shareholders with more frequent, predictable income streams, paid in three equal instalments each quarter. The monthly dividends will continue to be calculated on a quarterly basis at the current 1.5% post-tax NTA rate, subject to profits, cash flow, and franking credits.
The transition will begin with the usual quarterly dividend for December 2025 paid in February 2026, alongside additional monthly dividends in February and March. From April 2026 onwards, monthly dividends will be paid regularly. Notably, the dividend reinvestment plan (DRP) will be suspended following the December 2025 dividend, signaling a shift in shareholder engagement strategies.
Market Performance and Portfolio Insights
Despite the positive dividend news, Spheria’s portfolio underperformed the Small Ordinaries Index by approximately 4.1% over the September quarter. This shortfall was largely attributed to the gold sector’s strong performance, which surged over 16% in USD terms, driving the broader resources sector up by 32.6%. In contrast, Spheria’s focus on smaller, cash-generative companies with conservative gearing has led to a more measured performance, with a 12-month return of 18.1% compared to the Small Ords’ 21.5%.
The investment manager emphasized a long-term perspective, highlighting the importance of fundamentals amid market excitement around speculative small-cap stocks. The company remains confident that its disciplined approach will deliver superior returns across market cycles, even as gold’s appeal as a store of value continues amid global currency concerns.
Looking Ahead
With a franking account balance sufficient to support future fully franked dividends and a robust dividend history totaling 73 cents per share since its 2017 IPO, Spheria is positioning itself to attract income-focused investors. The move to monthly dividends could further enhance the company’s appeal, offering a steady income stream that aligns with shareholder preferences in a low-yield environment.
Shareholders interested in the current dividend reinvestment plan are encouraged to participate before the 28 October 2025 deadline. As the company embarks on this new dividend cadence, market participants will be watching closely to gauge the impact on share price and investor sentiment.
Bottom Line?
Spheria’s shift to monthly dividends signals a strategic push to deepen shareholder engagement and income appeal amid evolving market dynamics.
Questions in the middle?
- How will the transition to monthly dividends affect Spheria’s cash flow and capital management?
- Will the suspension of the dividend reinvestment plan after December 2025 impact shareholder participation?
- How might ongoing gold sector volatility influence Spheria’s portfolio strategy and relative performance?