Djerriwarrh delivers enhanced yield above the market while increasing dividends
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Fully franked dividend yield on net asset backing was 7.0%, representing an enhanced yield of 2.9 percentage points above the S&P/ASX 200 Index when franking is included.
Total dividends increased to 15.75 cents per share, fully franked, with FY26 marking the transition from semi-annual to quarterly dividends.
Full Year Profit increased 4.6% to $41.0 million, while Net Operating Result rose to $41.4 million.
Option income increased 11.4% to $18.6 million, supporting shareholder income alongside dividend income from a portfolio of quality companies.
Portfolio return was 2.8% including franking compared with 7.2% for the S&P/ASX 200 Accumulation Index, including franking.
Portfolio remains focused on delivering enhanced income through a diversified portfolio of quality companies and a disciplined option-writing strategy
Djerriwarrh Investments reported a Full Year Profit of $41.0 million for the financial year ending 30 June 2026, up from $39.2 million in the previous corresponding period.
The Net Operating Result, which is the Company’s preferred measure of profit performance, increased to $41.4 million from $40.8 million last year. This supported total fully franked dividends of 15.75 cents per share, up from 15.5 cents per share in FY25. During the year, Djerriwarrh also increased the frequency of dividend payments from semi-annual to quarterly.
Djerriwarrh delivered a fully franked dividend yield of 7.0% on net asset backing compared with 4.1% for the broader market, representing an enhanced yield of 2.9 percentage points when franking is included.
Portfolio Manager Brett McNeill said the Company's enhanced income strategy continued to deliver for shareholders in FY26.
“Djerriwarrh's primary objective is to deliver an enhanced yield for shareholders above the broader market. We do that through a combination of dividend income from quality companies and option income generated across the portfolio. Together, those income streams supported another strong profit result during FY26 and the payment of fully franked dividends to shareholders.”
Option income remained an important contributor during FY26, increasing 11.4% to $18.6 million. Combined with dividend income from the portfolio, it supported higher profit and dividends during the year.
Capital growth impacted by stock-specific factors and option exercises
Djerriwarrh's total portfolio return of 2.8% including franking credits was below the S&P/ASX 200 Accumulation Index return of 7.2%. The shortfall reflected both stock-specific factors and the impact of option exercises during the year.
The largest impact came from CSL, which remained one of the portfolio's larger holdings but underperformed during the year. ARB, Equity Trustees and Cochlear also delivered weaker returns over the period.
By contrast, Rio Tinto and Woodside Energy Group were among the strongest contributors to portfolio performance. However, the strong performance of the resources sector also resulted in a number of call option exercises, particularly in BHP. While these options generated additional income, the portfolio did not receive the full benefit of the subsequent capital growth from those holdings.
Other positive contributors included Woolworths Group and Pro Medicus, which was added to the portfolio during the year.
Focused on quality and diversification heading into FY27
The Australian share market delivered a fourth consecutive year of positive returns during FY26 despite ongoing geopolitical and economic uncertainty. However, the investment team believes the market remains moderately expensive based on several valuation measures, while forecast dividend yields remain below long-term averages.
Against this backdrop, Djerriwarrh remains focused on quality and diversification. The Company finished the year with call option coverage of 35%, providing flexibility to continue generating option income while maintaining exposure to future capital growth opportunities.
Looking ahead, Brett outlined the key factors shaping the portfolio's positioning for FY27:
“Combining our top-down valuation approach with bottom-up company research, we view the broader market as moderately expensive. Against that backdrop, our focus continues to be on quality and diversification,” he said.
“Dividend income is not overly reliant on any one sector, while option income is well spread across stocks and sectors, with a good amount already written for the year ahead.”
Djerriwarrh enters FY27 well positioned to continue delivering on its income-focused investment objective through a diversified portfolio of quality companies and disciplined option writing.
Shareholders will have an opportunity to hear more about the Company's performance and outlook at the 2026 Annual General Meeting, which will be held on Monday, 5 October 2026.