Cadence Capital Limited delivered a stellar 434% jump in profit after tax to $33.4 million for FY26, driven by a 313% revenue surge. The company declared a 3.0 cent fully franked final dividend plus a 1.0 cent special dividend, underpinning a strong yield amid active portfolio repositioning.
- Profit after tax surged 434% to $33.4 million
- Revenue jumped 313% to $63.3 million
- Declared fully franked 3.0c final and 1.0c special dividends
- Fund up 20.1%, outperforming index by 14.4%
- Net tangible assets per share rose to $1.03
Profit Soars on Investment Gains and Active Management
Cadence Capital Limited (ASX:CDM) reported a remarkable 434% rise in profit after tax to $33.4 million for the year ended 30 June 2026, on the back of a 313% jump in revenue to $63.3 million. This surge was largely powered by net realised and unrealised gains on investments, which ballooned to $57.5 million from just $2.6 million the prior year.
The fund’s performance translated into a 20.1% gain for FY26, comfortably beating the All Ordinaries Accumulation Index by 14.4%, while CDM’s share price, including dividends and franking, climbed 30.6% over the year. Net tangible assets per share rose modestly to $1.03 from $0.98.
Strong Dividend Payouts Reflect Confidence
Reflecting the robust earnings, Cadence declared a fully franked final dividend of 3.0 cents per share payable on 15 October 2026, alongside a fully franked special dividend of 1.0 cent per share payable in December. Together, these dividends yield a healthy 9.3% fully franked return or 13.2% grossed up for franking credits based on the announcement day share price of $0.755.
The company’s profits reserve now stands at 25 cents per share, enough to cover four years of dividends at the current rate, while franking credits of 5.4 cents per share provide approximately two years of fully franked dividends. The dividend reinvestment plan remains active for the final dividend, with shares issued under the plan subject to buy-back when trading at a discount to pre-tax net tangible assets.
Portfolio Moves Amid Gold Price Volatility
Chairman Karl Siegling highlighted gold and precious metals stocks as key contributors to the fund’s strong performance, with positions in Predictive Discovery, Robex Resources, Kingsgate, Endeavour Mining, and others benefiting from a gold price rally that peaked near US$5,600 per ounce in January 2026. However, as gold prices retreated to around US$4,000 per ounce by year-end, Cadence sharply reduced its gold and resource stock exposure by over 80%, boosting cash holdings.
More recently, the fund has pivoted towards high-quality companies that experienced significant market sell-offs, including CSL, Cochlear, Pro Medicus, and A2 Milk. These names were previously trading at elevated valuations but now meet Cadence’s fundamental criteria amid share price corrections and early signs of recovery.
Capital Management and Shareholder Returns
Cadence maintained an active capital management approach, continuing its on-market share buy-back program approved in October 2025, targeting up to 10 million shares. During FY26, the company repurchased shares at prices ranging from approximately $0.69 to $0.76, offset partly by shares issued under the dividend reinvestment plan.
Cash and cash equivalents nearly doubled to $153.5 million, reflecting both portfolio repositioning and strong operating cash flow. The company’s net assets remained stable at around $309 million despite share buy-backs and dividend payments totaling nearly $18 million.
Navigating a 1970s-Style Market Environment
Siegling drew parallels between current global markets and the 1970s, citing elevated inflation, resource nationalism, and geopolitical volatility as factors shaping the investment landscape. He anticipates continued market turbulence and sees opportunities in quality businesses that have become unloved due to short-term pressures, indicating a disciplined investment approach focused on fundamentals.
Bottom Line?
Cadence’s sharp profit rebound and strong dividend payouts underscore its nimble portfolio management amid volatile markets, but investors should watch how the fund navigates ongoing gold price swings and macroeconomic headwinds.
Questions in the middle?
- How will Cadence’s reduced gold exposure impact future returns if gold prices rebound?
- Can the repositioned portfolio in quality ‘unloved’ stocks sustain the fund’s outperformance?
- What is the potential impact of ongoing share buy-backs on CDM’s capital structure and liquidity?