Bendigo and Adelaide Bank’s Capital Note Dividend Signals Stability but Raises Future Questions

Dividend Announcement Overview

Bendigo and Adelaide Bank Limited (ASX – BEN) has confirmed an ordinary dividend distribution of AUD 1.311 per security for its Capital Note BENPH. This dividend is fully franked, meaning investors will benefit from a 30% corporate tax credit, enhancing the after-tax yield for Australian shareholders.

The dividend relates to the quarter ending 15 March 2026, with the ex-dividend date set for 2 March 2026 and the record date on 3 March 2026. Payment is scheduled for 16 March 2026, providing a clear timeline for investors to plan their income expectations.

Context and Terms of the Capital Note

The distribution rate of 5.2584% per annum is derived from the capital notes’ terms as outlined in the 2020 prospectus. This rate combines a base rate linked to the 3-month BBSW (Bank Bill Swap Rate) plus a margin of 3.80%, adjusted for tax effects. The capital notes are perpetual, non-cumulative, and redeemable in 2027, offering investors a hybrid fixed income instrument with exposure to the bank’s credit profile.

Importantly, the dividend is classified as an ordinary distribution and is fully franked, which is attractive for investors seeking tax-efficient income streams. The bank has confirmed no additional approvals were required for this dividend, indicating a smooth regulatory environment for this payment.

Implications for Investors and Market

For fixed income and hybrid security investors, this announcement provides certainty on income returns for the upcoming quarter. The fully franked nature of the dividend enhances its appeal, especially for Australian tax residents. Given the stable distribution rate and adherence to the original prospectus terms, the announcement signals Bendigo and Adelaide Bank’s ongoing commitment to maintaining investor confidence in its capital instruments.

Market participants will likely view this as a reaffirmation of the bank’s financial health and capital management strategy. However, as with all hybrid securities, investors should remain mindful of the perpetual nature of the notes and the potential for changes in interest rates or credit conditions that could impact future distributions.