Changes are happening - please bear with us while we update our site.

Changes are happening - please bear with us while we update our site.

Result: BKI (ASX:BKI) cuts FY20 dividend

Listed investment company (LIC) BKI (ASX:BKI) has reported its result for the 2020 financial year. The report included a dividend cut to investors. 

Listed investment company (LIC) BKI (ASX: BKI) has reported its result for the 2020 financial year. The report included a dividend cut to investors.

What is BKI?

Bki Investment Co Ltd is a listed investment company (LIC) that was formed in 2003 to take over and manage the investment portfolio of Brickworks Limited (ASX: BKW). BKI’s objective is to generate an increasing income stream through a long term investment portfolio that would grow over time. The core portfolio was created around 30 years ago.

BKI’s FY20 result

BKI said that due to the COVID-19 economic crisis, Australia equity investors have recently experienced a significant cut to dividends, with many companies deferring or even cancelling dividend payments altogether. BKI’s income and profits were not immune from the pain.

The LIC reported that ordinary investment revenue was down 13% to $45.4 million. Lower dividends were received from shares like Woodside Petroleum (ASX: WPL), NAB (ASX: NAB), Macquarie (ASX: MQG) and Transurban (ASX: TCL). And some businesses didn’t pay a dividend at all like ANZ (ASX: ANZ), Westpac (ASX: WBC) and Sydney Airport (ASX: SYD).

The drop in investment revenue flowed onto to the profit result. Ordinary net operating profit after tax dropped 15% to $41.6 million. Earnings per share (EPS) fell 16% to 5.67 cents.

The company received $7.2 million in special dividend revenue from names like Telstra (ASX: TLS), TPG (ASX: TPG), Harvey Norman (ASX: HVN) and Orora (ASX: ORA).

Including special investment income, net operating profit after tax was down 35% to $48.6 million. FY19 included a number of special dividends due to the potential removal of franking credits.

BKI said that its management expense ratio was just 0.17%, which is quite low compared to most other externally managed LICs, ETFs and managed funds in Australia.

In terms of total shareholder returns, BKI’s return was a negative 7.1%, compared to minus 7.6% for the S&P/ASX 300 Accumulation Index return. This means BKI outperformed by 0.5%.

BKI revealed that it has completely sold out of some shares including Boral (ASX: BLD), Ampol (ASX: ALD), ANZ, Challenger (ASX: CGF) and Cimic (ASX: CIM).

Dividend

Due to the current economic situation and the number of dividend cuts from investment holdings, BKI declared a final ordinary dividend of 2.32 cents per share, as well as a 1 cent per share special dividend. That brings the total dividend per share for FY20 to 6.945 cents, a cut of 29%. The ordinary dividend per share is down 19% to 5.945 cents per share.

Summary

A dividend cut is obviously disappointing for shareholders, but to pay the dividend would have meant eating into the portfolio. BKI is expecting further dividend cuts and perhaps capital raisings from some shares. I like how BKI’s portfolio has adjusted to shares like Macquarie and APA (ASX: APA). However, ASX blue chips aren’t where I’m looking to invest. But I think BKI could be a good option for continued good dividend income for many years into the future.

[ls_content_block id=”14947″ para=”paragraphs”]

$50,000 per year in passive income from shares? Yes, please!

With interest rates UP, now could be one of the best times to start earning passive income from a portfolio. Imagine earning 4%, 5% — or more — in dividend passive income from the best shares, LICs, or ETFs… it’s like magic.

So how do the best investors do it?

Chief Investment Officer Owen Rask has just released his brand new passive income report. Owen has outlined 10 of his favourite ETFs and shares to watch, his rules for passive income investing, why he would buy ETFs before LICs and more.

You can INSTANTLY access Owen’s report for FREE by CLICKING HERE NOW and creating a 100% FREE Rask Account.

(Psst. By creating a free Rask account, you’ll also get access to 15+ online courses, 1,000+ podcasts, invites to events, a weekly value investing newsletter and more!)

Unsubscribe anytime. Read our TermsFinancial Services GuidePrivacy Policy. We’ll never sell your email address. Our company is Australian owned.

Information warning: The information on this website is published by The Rask Group Pty Ltd (ABN: 36 622 810 995) is limited to factual information or (at most) general financial advice only. That means, the information and advice does not take into account your objectives, financial situation or needs. It is not specific to you, your needs, goals or objectives. Because of that, you should consider if the advice is appropriate to you and your needs, before acting on the information. If you don’t know what your needs are, you should consult a trusted and licensed financial adviser who can provide you with personal financial product advice. In addition, you should obtain and read the product disclosure statement (PDS) before making a decision to acquire a financial product. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

At the time of publishing, Jaz does not have a financial or commercial interest in any of the companies mentioned.
Skip to content