Australian Foundation Investment Company shares: Half-year profit slips, dividends held steady

The Australian Foundation Investment Co Ltd (ASX: AFI) share price is in focus today after posting a half-year profit after tax of $147.0 million, down 4.6% compared to the same time last year. Revenue from operating activities dipped 2.8% to $168.7 million, with lower investment income despite special dividends from some holdings.

What did Australian Foundation Investment Company report?

• Profit after tax: $147.0 million, down 4.6% from $154.2 million last year
• Revenue from operating activities: $168.7 million, down 2.8%
• Investment income: $160.6 million, compared to $166.3 million in the prior period
• Interim dividend: 12.0 cents per share, fully franked, unchanged from last year
• Special dividend: 2.5 cents per share, fully franked
• Portfolio return for 6 months: negative 2.0% (including franking)

What else do investors need to know?

The board has announced both an interim and a special dividend for shareholders, using a solid franking credit balance built up over recent years. While overall dividend income fell—mostly due to smaller payouts from companies like BHP, Woodside and Woolworths—certain blue-chip holdings such as ARB and Wesfarmers paid special dividends during the half.

AFIC adjusted its portfolio by trimming positions in overvalued holdings like Wesfarmers and Commonwealth Bank and added to Telstra, Woolworths, and Sigma Healthcare. The portfolio return lagged the S&P/ASX 200 Accumulation Index, reflecting underperformance from some of its larger holdings and less exposure to strongly performing small and mid-cap resource stocks.

What’s next for Australian Foundation Investment Company?

Looking ahead, the company intends to maintain its approach of investing in high-quality businesses to deliver consistent returns and dividends. Management remains cautious due to elevated market valuations and ongoing economic uncertainty but continues to look for opportunities in undervalued sectors and quality companies.

The board is also aiming to pay another fully franked special dividend with the full-year result in July. Directors plan to revisit capital management strategies, considering franking credit balances and market conditions.

Australian Foundation Investment Company share price snapshot

Over the past 12 months, the Australian Foundation Investment Company shares have declined 6%, trailing the S&P/ASX 200 Index (ASX: XJO) which has risen 5% over the same period.

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The post Australian Foundation Investment Company shares: Half-year profit slips, dividends held steady appeared first on The Motley Fool Australia.

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Motley Fool contributor Laura Stewart has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. This article was prepared with the assistance of Large Language Model (LLM) tools for the initial summary of the company announcement. Any content assisted by AI is subject to our robust human-in-the-loop quality control framework, involving thorough review, substantial editing, and fact-checking by our experienced writers and editors holding appropriate credentials. The Motley Fool Australia stands behind the work of our editorial team and takes ultimate responsibility for the content published by The Motley Fool Australia.