How Carlton Investments Is Navigating Market Volatility While Boosting Dividends

Steady Financial Performance

Carlton Investments Limited has delivered a modest but notable increase in net profit for the year ended 30 June 2025, reporting $38.81 million compared to $38.77 million the previous year. This 0.1% rise underscores the company’s consistent operational discipline amid a challenging market environment.

Income from dividends and distributions remained largely stable, with a slight dip of 0.1%, while interest income benefited from higher average term deposit rates and increased funds on deposit. The company’s administration expenses were marginally reduced, contributing to a management expense ratio of just 0.08%, one of the lowest among ASX-listed investment companies.

Growing Dividends and Shareholder Returns

Shareholders enjoyed an 8.7% increase in total ordinary share dividends to $1.13 per share, reflecting the company’s commitment to delivering sustainable income. The interim and final dividends were fully franked, reinforcing Carlton’s focus on providing tax-effective returns. Preference shareholders also received fully franked dividends during the year.

Over the five-year period from mid-2020 to mid-2025, the company’s investment portfolio has appreciated by nearly 60%, growing from $731 million to $1.255 billion. This growth, combined with $145 million in dividends paid to ordinary shareholders, has resulted in a total shareholder return of 22.7% for the year, comfortably outperforming the S&P/ASX 200 Accumulation Index’s 13.8%.

Investment Strategy and Market Outlook

Carlton’s portfolio remains concentrated in well-managed Australian listed companies expected to provide reliable income streams and long-term capital growth. Notable additions during the year included shares in IPH, Origin Energy, Whitehaven Coal, and major banks such as ANZ and Westpac. The company continues to avoid short-term trading and derivatives, preferring to invest cash generated internally without external borrowings or capital raisings.

Despite a 7% decline in portfolio value in the first quarter of FY2026, partly due to a dip in EVT’s share price, Carlton remains optimistic. The company acknowledges ongoing volatility in Australian equity markets driven by domestic and global factors but sees opportunities to acquire quality assets at attractive valuations.

Capital Management and Future Prospects

Capital management remains a priority, with the company completing share buy-backs totaling $1.73 million in FY2025 and $472,000 since July 2025. The Board is considering a new buy-back program, balancing the need to maintain dividend payments and preserve capital for investment opportunities.

Looking ahead, Carlton anticipates interest rates to stabilise or potentially ease in 2026, which could influence income from term deposits and broader market conditions. The company’s disciplined approach and low-cost structure position it well to navigate the evolving landscape while continuing to deliver value to shareholders.