The Australian Foundation Investment Co Ltd (ASX: AFI) (AFIC) share price is up slightly after reporting its HY25 result.
AFIC is a listed investment company (LIC) focused on a diversified portfolio of ASX shares which aims to provide attractive income and capital growth for shareholders over the longer-term.
HY25 result
The LIC reported that its half-year net profit for the six months to 31 December 2024 of $154.2 million, which was up 2.7% year on year.
AFIC made a number of profitable sales as some valuations became “stretched” and some portfolio positions were reduced. The largest sale was a small proportion of its Commonwealth Bank of Australia (ASX: CBA) shares. These sales will generate franking credits.
In terms of the investment return, AFIC said its portfolio return was 7.2% for the six months, including franking, compared to a return of 7.6% for the S&P/ASX 200 Accumulation Index, including franking.
However, over the 12 months, AFIC’s return was 13.2% compared to 12.7% for the index. Good performance is normally a good thing for the AFIC share price.
Investments and exits
AFIC noted that it made a number of adjustments during the period. It said that it increased its holdings in BHP Group Ltd (ASX: BHP), Woodside Energy Group Ltd (ASX: WDS), Telstra Group Ltd (ASX: TLS), Cochlear Ltd (ASX: COH), James Hardie Industries plc (ASX: JHX) and WiseTech Global Ltd (ASX: WTC). The LIC said it thinks these companies have strong long-term prospects. The purchases were made during period of “short-term negative news flow, providing attractive buying opportunities”.
It also initiated positions in five companies, including Ampol Ltd (ASX: ALD), Worley Ltd (ASX: WOR), Macquarie Technology Group Ltd (ASX: MAQ), BlueScope Steel Limited (ASX: BSL) and Sigma Healthcare Ltd (ASX: SIG).
Also said it exited Ramsay Health Care Ltd (ASX: RHC) because of significant structural changes in the industry are likely to continue. It also sold Domino’s Pizza Enterprises Ltd (ASX: DMP) shares.
AFIC dividend
The board of AFIC decided to declare an interim dividend per share of $0.12, an increase of 4.3% from $0.115 in HY24.
Outlook for the AFIC share price
The LIC is expecting more share market volatility and it suggested the operating environment for many companies appears set to become increasingly challenged, with slowing economic and sales growth, and ongoing (but lower) inflation of costs.
I think this could be a good time to invest in AFIC shares because it’s trading at a 9% discount to its latest weekly update underlying value. It also offers a solid and slowly growing dividend.
