Adelaide listed investment company, Argo Investments, posted an increase in full-year profit to $175 million and a higher full year final dividend.
The latest annual profit was up 4.6 per cent on the previous year.
Earnings per share rose 3.4 per cent to 27.7 cents per share.
The final dividend has been increased to 13.5 cents per share fully franked which includes a 0.75 cent per share listed investment company (LIC) capital gain component, and compares with 13 cents per share fully franked last year which included a 1 cent per share LIC capital gain component.
Argo’s chief executive officer Jason Beddow said the improved result reflected increased dividends and distributions received from the company’s diverse portfolio of investments, partially offset by a decline in interest income on cash deposits due to lower interest rates available.
You might like
“Our investment portfolio outperformed the broader Australian share market in 2012-2013,” Beddow said.
“The strong performance of higher yielding stocks and the relative underperformance of the mining sector over the period both contributed to this result,” Beddow said.
Argo completed the 2012-2013 financial year with no debt and cash reserves of $196 million.
Beddow said the outlook is positive.
Stay informed, daily
“We remain of the view that for a long-term investor, the Australian equity market is relatively good value and as a result Argo has continued to prioritise investments in larger, well capitalised companies with relatively high, predominantly franked, dividend yields and scope for dividend growth,” he said.
“This has been a successful strategy which has delivered strong portfolio performance during the financial year, as investors in Australia seek to acquire these types of securities in their search for yield in an environment of low interest rates.”
Beddow said that while the global economic outlook is showing signs of improvement, particularly in the US, some structural challenges remain in Europe and markets are wary of slowing growth in China.
“As investors seek direction in this environment, bouts of volatility have been a feature of equity and bond markets. The more the US economy improves, the greater the likelihood of higher interest rates in that country. In addition, investors have struggled to interpret conflicting commentary from the US Federal Reserve, which appears to be divided as to the timing of the unwinding of its monetary expansion program.”
The company’s assessment of local economic conditions was more bearish.
“Domestically, the Australian economy appears sluggish. In response, the Reserve Bank of Australia continues to cut interest rates in order to stimulate the non-resource segments of the economy in particular.
“The possibility of slowing Australian economic growth has seen the Australian dollar fall almost 15% against the US dollar since mid-April, as international investors take profits. However, the weaker currency and further interest rate cuts should provide some relief and stimulate consumer spending and business investment in Australia.
“Against this backdrop, we do not expect strong earnings growth from Australian companies over the coming year and therefore predict only modest dividend growth. However, we believe the overall yield available in the Australian equity market remains attractive.”
Want to see more stories from InDaily SA in your Google search results?
- Click here to set InDaily SA as a preferred source.
- Tick the box next to "InDaily SA". That's it.
