Argo Investments Ltd (ASX: ARG) has announced it will pay dividends every three months from the start of next year, while also flagging its dividend payments for the year ahead.
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Dividend payouts to increase
The listed investment company said it intended to pay four, 10-cent, fully-franked dividends next year, increasing its dividend payments from this year's 38.5 cents.
Argo's Managing Director Jason Beddow said the move to quarterly dividends "will provide our shareholders with more regular income to help meet the evolving cash flow needs of many households, while also making Argo more attractive to prospective shareholders''.
Mr Beddow added that the 40-cent dividend payout next year would be another record high for the company.
Argo in FY26 posted a profit of $260.2 million, up from $259.8 million the previous year.
The company said its final dividend "includes a listed investment company (LIC) capital gain component of 5 cents per share, reflecting crystallised gains in the portfolio''.
Argo added:
When Argo realises a capital gain on the sale of a long-term holding in our portfolio, a capital gains tax discount can be passed on to shareholders as though they made the gain themselves. This allows most individuals and self-managed superannuation funds to claim a tax deduction, in addition to the benefit of franking credits. Please note, the LIC capital gain component of this dividend is unaffected by the recent changes to Australia's capital gains tax (CGT) regime. Argo is engaging with government through our industry association to ensure we maintain our special status as a genuine long-term investor, rather than a trader, so we can continue to provide this benefit to our shareholders.
Trading gains locked in
Major additions to the Argo portfolio over the year included CSL Ltd (ASX: CSL), Amcor Ltd (ASX: AMC), and Megaport Ltd (ASX: MP1).
Sales included Rio Tinto Ltd (ASX: RIO), Reece Ltd (ASX: REH), and Macquarie Group Ltd (ASX: MQG).
Argo said it outperformed the S&P/ASX 200 Index (ASX: XJO) during the year.
The company said:
Argo delivered a full-year return of +8.7% based on net tangible assets (NTA) return after all costs and adjusted for company tax paid, outperforming the Index, which rose +6.1%, without allowing for any costs. The outperformance generated approximately $200 million in additional value for the portfolio. The biggest positive contributors to performance during the financial year were our positions in Rio Tinto, Macquarie Group and Lynas Rare Earths. Our underweight exposure to Commonwealth Bank relative to the Index also boosted returns as the bank's share price retreated from its lofty valuations, following a sharp sell-off after the May Federal Budget.
Argo said it had outperformed the index over the past five years. The company is valued at $6.91 billion.
