Djerriwarrh Investments Adopts Quarterly Dividends, Offering 7.0% Fully Franked Yield for FY2026

Transition to Quarterly Dividend Payments Enhances Shareholder Income Frequency

In FY2026, Djerriwarrh Investments Limited implemented a strategic shift from semi-annual to quarterly dividend distributions. The inaugural quarterly dividend of 4.25 cents per share, fully franked, was paid on 28 May 2026. This change reflects the company's dedication to delivering more frequent income streams to shareholders while preserving the fully franked nature of dividends. Djerriwarrh’s investment approach prioritizes companies with strong dividend income potential, supplemented by option strategies that generate additional revenue to support enhanced dividend payouts.

The quarterly dividend model aligns with investor preferences for regular income, improving cash flow consistency. The interim dividend for FY2026 was 7.25 cents per share, fully franked, paid on 23 February 2026, followed by the first quarterly payment in May. The final quarterly dividend for the June quarter, declared at 4.25 cents per share, matches the March quarter’s amount, indicating a sustainable and consistent dividend distribution strategy designed to bolster investor confidence.

Dividend Yield Surpasses S&P/ASX 200 Index by 2.9 Percentage Points

Djerriwarrh’s fully franked dividend yield of 7.0% on net asset backing as of 30 June 2026 significantly outperforms major Australian equity benchmarks, exceeding the S&P/ASX 200 Index yield by 2.9 percentage points when including franking credits. This premium yield is notable amid current market conditions and is driven by the company’s focused portfolio allocation toward high dividend-yielding stocks combined with active option income generation. Total dividends for FY2026 were 15.75 cents per share, a slight but meaningful increase from 15.5 cents in the prior year.

The yield advantage stems from Djerriwarrh’s investment strategy emphasizing holdings with strong dividend income characteristics, augmented by option strategies that generated $18.6 million in income during FY2026. This diversified income approach enables the company to deliver superior yields without relying on excessive leverage or non-core assets. The fully franked dividends further improve after-tax returns for eligible Australian investors who can utilize franking credits.

Capital Gains Component in Dividend Offers Tax Efficiency

The Board has structured the final quarterly dividend to include 2.5 cents per share sourced from capital gains realized during the investment period. The pre-tax equivalent gain is 3.57 cents per share, allowing some shareholders to claim a tax deduction on their personal returns. This approach reflects that the company has already paid tax on these gains at the corporate level and provides tax planning flexibility depending on individual shareholder circumstances. Detailed capital gains information will be included in dividend statements.

This tax-efficient dividend structuring demonstrates prudent capital management by distributing realized gains in a way that supports shareholders’ tax planning, particularly benefiting those in lower tax brackets or with accumulated franking credits. Transparency through detailed statements ensures shareholders can accurately assess the tax implications of their dividend components.

Net Operating Result Climbs to $41.4 Million Fueled by Option Income Growth

Djerriwarrh reported a Net Operating Result of $41.4 million for FY2026, up from $40.8 million the previous year. This figure excludes unrealized option position valuations and is considered a key indicator of income generated from core investment activities. Net Operating Result per share rose to 15.7 cents from 15.5 cents year-on-year, forming the foundation for dividend decisions.

Option income contributed $18.6 million in FY2026, an 11.4% increase from $16.7 million in FY2025, highlighting the effectiveness of the company’s option strategies. Investment income remained stable at $36.0 million compared to $36.2 million the prior year. The combined income streams supported an increased dividend payout while reducing the management expense ratio to 0.41% from 0.47%, reflecting operational efficiency.

Net Profit of $41.0 Million Marks 4.6% Growth Amid Market Challenges

Djerriwarrh’s net profit attributable to members reached $41.0 million for FY2026, a 4.6% increase from $39.2 million in FY2025. Earnings per share improved to 15.6 cents from 14.9 cents. Despite subdued portfolio returns, this profit growth underscores the company’s robust income generation through investments and option strategies, underpinning the enhanced dividend frequency.

Investment income was slightly down by 0.7% to $36.0 million, while option income maintained strong growth. This diversified income base provides earnings stability and supports the sustainability of the company’s attractive dividend yield. Effective portfolio management and disciplined cost control contributed to these positive financial outcomes.

Portfolio Performance Lagged Due to Concentrated Positions in CSL, Equity Trustees, and Cochlear

For the year ended 30 June 2026, Djerriwarrh’s portfolio returned 2.8% including dividends and franking credits, underperforming the S&P/ASX 200 Accumulation Index return of 7.2% by 4.4 percentage points. This relative underperformance was primarily driven by overweight positions in CSL, Equity Trustees, ARB, and Cochlear, which underperformed broader market gains despite strong fundamentals and dividend profiles.

Additionally, BHP’s strong share price performance led to option exercises that reduced the holding to an underweight position, illustrating the trade-off between option income generation and capital appreciation. Unlike the prior year, underweight exposure to major Australian banks had minimal impact on relative performance. Over a ten-year horizon, Djerriwarrh has delivered 8.2% per annum including franking credits, compared to the index’s 10.9%, providing longer-term context to the recent underperformance.

Net Tangible Assets Per Share Decline Reflects Market Valuation Changes

Pre-dividend net tangible assets per share stood at $3.22 as of 30 June 2026, down from $3.40 at the prior year-end. This measure excludes deferred tax provisions on unrealized gains and reflects market valuation fluctuations and portfolio performance challenges. The decline does not indicate deterioration in portfolio quality or income capacity.

Djerriwarrh’s dividend policy is anchored to the Net Operating Result rather than net tangible asset movements, ensuring distributions remain sustainable and not influenced by asset valuation volatility. The final dividend of 4.25 cents per share will be paid on 27 August 2026 to shareholders registered by 6 August 2026, with shares trading ex-dividend from 5 August 2026.

Dividend Reinvestment and Substitution Plans Offered at Market-Based Pricing

Shareholders can participate in Djerriwarrh’s Dividend Reinvestment Plan (DRP) and Dividend Substitution Share Plan (DSSP), electing to receive new shares instead of cash dividends. Shares under these plans are issued at a nil discount to the Volume Weighted Average Price (VWAP) over the five trading days following the ex-dividend date on ASX and Cboe platforms. Participation notices must be submitted by 5pm AEST on 7 August 2026.

Shares issued through DRP or DSSP rank equally with existing shares, enabling cost-effective share accumulation without transaction fees. The nil discount pricing ensures fair treatment among shareholders. The final dividend contains no foreign conduit income, confirming its Australian domestic source.

Lower Management Expense Ratio Highlights Operational Efficiency

Djerriwarrh’s management expense ratio improved to 0.41% for FY2026 from 0.47% the previous year, reflecting strong cost control and operational efficiency. This competitive expense ratio supports the company’s value proposition of delivering enhanced returns at low cost.

The expense reduction coincides with the transition to quarterly dividends, indicating that administrative changes were implemented without increasing costs. The company’s disciplined management and infrastructure enhancements suggest potential for further margin improvements with asset growth, benefiting shareholders through higher net dividends and total returns.

Shareholder Webcast and AGM Details Announced

Djerriwarrh will host a webcast update on FY2026 results on 29 July 2026 at 3:30pm AEST. Access details are available at djerri.com.au. The webcast offers shareholders insights into portfolio positioning, outlook, and the rationale behind the dividend frequency change.

The Annual General Meeting is scheduled for 10:00am AEDT on Monday, 5 October 2026, providing shareholders the opportunity to vote on governance and remuneration matters and engage with the Board and management. Shareholders are encouraged to review meeting notices and participate actively.