Spheria Emerging Companies Boosts Quarterly Dividend to 3.5 Cents Amid Strong Returns
Spheria Emerging Companies Limited has declared a fully franked quarterly dividend of 3.5 cents per share, reflecting its commitment to increased shareholder returns following a robust portfolio performance in Q4 2024.
- Quarterly dividend of 3.5 cents per share fully franked at 30%
- Dividend aligns with increased target of 1.5% of post-tax NTA per quarter
- Portfolio delivered a 1.7% absolute return, outperforming benchmark by 2.7%
- Dividend reinvestment plan remains available for shareholders
- Franking account supports future dividend payments with $4.5 million balance
Dividend Announcement and Policy Update
Spheria Emerging Companies Limited (ASX: SEC) has announced a fully franked quarterly dividend of 3.5 cents per share for the period ended 31 December 2024. This dividend, payable on 12 February 2025, reflects the company's commitment to its revised dividend policy introduced mid-2024, targeting quarterly payouts at 1.5% of post-tax net tangible assets (NTA).
The dividend calculation is based on the post-tax NTA of $2.344 per share as at 31 December 2024, reinforcing a disciplined approach to returning value to shareholders while maintaining financial prudence.
Strong Portfolio Performance Amid Market Inefficiencies
The investment manager, Spheria Asset Management Pty Ltd, highlighted that the portfolio achieved a 1.7% absolute return during the December quarter, significantly outperforming the benchmark which declined by 1.0%. This outperformance underscores the fund's ability to navigate a market environment where momentum investing has overshadowed fundamental analysis.
Commenting on market dynamics, the manager noted a shift away from fundamentals underpinning investments, particularly in ETFs and index funds, which often lack transparent valuation rationales. Despite this, SEC's active management strategy has capitalized on market inefficiencies, positioning the fund for continued relative outperformance.
Dividend Reinvestment Plan and Financial Position
Shareholders are invited to participate in the dividend reinvestment plan (DRP), with elections due by 23 January 2025. The DRP offers an opportunity to compound returns by reinvesting dividends into additional shares, a feature that may appeal amid ongoing market volatility.
Financially, SEC maintains a robust franking account balance of $4.5 million, equivalent to 17.4 cents per share in fully franked dividends, ensuring capacity to sustain dividend payments. Since its IPO in December 2017, the company has distributed a total of 62.1 cents per share in dividends, reflecting a consistent commitment to shareholder returns.
Looking Ahead
The board remains vigilant, monitoring market conditions and company profitability to adjust dividend policy as necessary. The combination of strong portfolio returns and a healthy franking account positions SEC well to continue delivering value, though investors should remain mindful of the evolving market landscape.
Bottom Line?
Spheria’s disciplined dividend approach and portfolio resilience set the stage for navigating 2025’s market uncertainties.
Questions in the middle?
- How sustainable is SEC’s dividend policy if market momentum investing persists over fundamentals?
- What impact will shareholder participation in the DRP have on SEC’s capital structure?
- How might SEC adjust its dividend targets if market volatility intensifies or profits fluctuate?
