Own AFIC shares? Here's what you need to know about the latest dividend

AFIC's latest dividend won't come as too much of a shock.

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Key points

  • The Australian Foundation Investment Co is a popular ASX LIC, famed for its decades of dividends
  • AFIC has just revealed its latest dividend, but investors probably aren't greeting this with much enthusiasm
  • That could be thanks to AFIC paying its tenth straight final dividend of 14 cents per share

It's been an uneventful day for the Australian Foundation Investment Co Ltd (ASX: AFI) share price so far this Wednesday. AFIC shares have opened the trading day slightly higher and are currently up 0.28% at $7.12 each.

But if you own AFIC shares, chances are you'll be paying more attention to the dividend announcement the company has made.

As one of the ASX's oldest listed investment companies (LICs), AFIC shares are widely held for their dividend potential. This broad-based ASX LIC has been paying robust dividends for decades, driven by the company's large portfolio of ASX blue chip shares.

So what did AFIC have to tell its investors this morning?

The company has announced its upcoming final dividend will come in at 14 cents per share, fully franked. The ex-dividend date for this payment has been set for 11 August. While the final payment date will be on 1 September.

Investors will then have until 15 August to opt in for the optional dividend reinvestment plan (DRP), if they wish to receive additional AFIC shares in lieu of a cash payment.

AFIC shares rise as dividend remains the same

This dividend might come as something of a disappointment for AFIC investors. It's not a cut from last year's final dividend. But nor is it a raise. In fact, this year will mark the tenth year in a row AFIC has paid out a final dividend of 14 cents per share.

Investors might have been expecting something more. That's considering the interim dividend of 11 cents per share from February was a 10% hike from the 10 cents per share investors bagged last year.

This latest dividend means that AFIC now has both a trailing and forward dividend yield of 3.51% at the current share price of $7.12.

However, this dividend news wasn't all AFIC had to say to investors today.

The company has also uncovered some preliminary results for the 2023 financial year this morning.

AFIC revealed that net profit for the year was down 14% from FY2022 to $310.2 million. Excluding the impacts of the merger of BHP Group Ltd (ASX: BHP)'s energy portfolio with Woodside Energy Group Ltd (ASX: WDS), net profits rose 8.6%.

However, revenues for the period also suffered, dropping 12.6% down to $344 million.

In some good news for investors though, AFIC only charged an expense ratio of 0.14% for the year. That's down from the 0.16% investors paid last financial year.

AFIC's net tangible assets per share came to $7.19 as of 30 June. That was a healthy rise over the equivalent figure of $6.63 in June 2022.

AFIC did have a little more to say on its latest dividend here as well:

The Board has elected to source 7 cents per share of the final dividend from capital gains, on which the Group has paid or will pay tax. The amount of this pre-tax attributable gain, equals 10 cents per share. This enables some shareholders to claim a tax deduction in their tax return. Further details will be on the dividend statements.

The AFIC share price has struggled in recent times. This ASX LIC remains down by 4.56% in 2023 to date and 11% lower over the past 12 months:

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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