Sydney-based listed investment company Milton Corp (its linked to the Washington H Soul Pattinson-Brickworks Ltd group of companies) has revealed a modest lift in interim dividend for the December half year and expects markets to remain tough over the next few months.
Included in the interim (fully franked) of 9 cents a share (up from 8.8 cents a share) were some of the special dividends paid out by companies like BHP and Rio Tinto.
Unlike Australian Foundation Investment Co, Amcil and Mirrabooka (and BKI Investment, which is also part of the Washington H Soul Pattinson-Brickworks Ltd group of companies) Milton didn’t break declare a separate special interim dividend. But director intimated that one could be coming later in the year.
“Second half operating profit is currently expected to be an improvement on the previous corresponding period. In the absence of unforeseen circumstances, Milton is expected to have sufficient earnings and liquidity to at least maintain the final ordinary dividend at 10.2 cents per share.
“We note that special dividend income is expected to be strong in the second half which may allow for a special dividend for the full year,” directors said yesterday.
The company said it expects the market to remain volatile in the short term with many macroeconomic factors at play including trade concerns, housing prices and the direction of interest rates.
“Underlying company earnings and dividend growth, however, remain solid and market valuations are not stretched.
“Milton’s management team will continue to monitor the companies already held by Milton and seek to add to positions and search for opportunities to further diversify our portfolio.”
Milton reported a net profit after tax for the six months to December 31 of $70.7 million (2017: $66.6 million). Director said that this includes $1.7 million of special dividends. Special dividends received in the previous corresponding half amounted to $0.6 million.
Underlying operating profit grew by 4.6% to $69.0 million due to strong growth in ordinary dividend income received from Milton’s investment portfolio.
“In the first half of 2019 Milton’s portfolio outperformed during a challenging period for equity markets. The ASX All Ordinaries Accumulation index returned -7.3% over the first half and Milton’s total portfolio return was -4.6%. For the year to 31 December 2018, Milton’s total portfolio return was -2.6% with the All Ordinaries Accumulation Index -3.5%.
“Milton has no debt on its balance sheet and net tangible assets before provision for tax on unrealised capital gains were valued at $2.9 billion at 31 December 2018. ”
Milton during the December half $56 million of equity investments were added, partially funded by $15 million of disposals.
Investments made during the period include Cleanaway ($10.3 million), BHP ($7.5 million), Transurban ($7.3 million), AGL ($7.1 million) and RIO ($6.1 million).
The larger disposals were Vicinity Centres ($5.0 million) and Graincorp ($2.9 million).
$22 million of equity investments were added through the acquisition of a family investment company by Milton on in August.
Milton shares rose 0.4% to $4.46.