Can Spheria Sustain Dividends After Underperforming Market Rally?
Spheria Emerging Companies Limited has announced its highest-ever quarterly dividend of 3.6 cents per share, fully franked and payable in August 2025, reflecting strong long-term portfolio returns despite recent market volatility.
- Record quarterly dividend of 3.6 cents per share
- Dividend fully franked at 30% corporate tax rate
- Dividend based on 1.5% of post-tax NTA as of June 30, 2025
- Portfolio underperformed benchmark in June quarter but outperformed over 12 months
- Dividend reinvestment plan remains available for shareholders
Record Dividend Announcement
Spheria Emerging Companies Limited (ASX – SEC) has declared a quarterly dividend of 3.6 cents per share for the period ending 30 June 2025. This marks the highest quarterly dividend the company has ever paid, fully franked at the corporate tax rate of 30%, and payable on 15 August 2025. The dividend aligns with the company’s policy of distributing 1.5% of its post-tax net tangible assets (NTA) each quarter, subject to available profits and cash flow.
Portfolio Performance Amid Market Volatility
While the June quarter saw the Spheria portfolio rise by 2.4%, it notably underperformed the benchmark’s robust 8.6% gain. The investment manager attributed this to typical June tax loss selling pressures and the company’s deliberate avoidance of high multiple stocks, which tend to dominate market rallies. However, when viewed over a longer horizon, the portfolio has delivered a strong 16.3% return over the past year, outperforming the benchmark’s 12.3%.
Dividend Reinvestment Plan and Shareholder Returns
Shareholders have the option to participate in the company’s dividend reinvestment plan (DRP) for this dividend, with elections due by 30 July 2025. Since its IPO in December 2017, Spheria Emerging Companies has paid total dividends of 69.2 cents per share, underscoring a consistent commitment to shareholder returns. The company’s franking account balance of $4.3 million supports future fully franked dividends, reflecting solid profit reserves.
Looking Ahead
The Board has indicated it will continue to monitor market conditions closely to guide future dividend policy decisions. The cautious investment approach, avoiding the “high multiple casino,” suggests a focus on sustainable, long-term value rather than chasing short-term market fads.
Bottom Line?
Spheria’s record dividend underscores confidence in its long-term strategy despite short-term market headwinds.
Questions in the middle?
- Will the portfolio’s recent underperformance in the quarter affect future dividend levels?
- How many shareholders will opt into the dividend reinvestment plan this quarter?
- Could market conditions prompt a revision of the 1.5% post-tax NTA dividend target?
