Argo Investments’ stronger interim result leads to dividend lift

ARGO Investments has lifted its interim dividend on the back of rising commodity prices and a stronger local share market.

Argo Investments managing director Jason Beddow at the Adelaide Convention Centre.

ARGO Investments has lifted its interim dividend on the back of rising commodity prices and a stronger local share market.

The Adelaide-based investment company reported a 6.2 per cent increase in half-year profit, to $110.5 million, and increased its dividend to 15.5 cents from 15 cents a year earlier.

A 8.4 per cent increase in dividend revenue across the Argo portfolio supported the company’s stronger result, backed by bigger distributions from major miners BHP and Rio Tinto.

“Many companies in the resources sector had reduced their dividends this time last year, but most have rebounded as commodity prices continue to rise amid improving global growth,” the company said.

“The Australian economy looks in reasonable shape, with historically reliable indicators such as the NAB business sentiment survey, government infrastructure spending and employment all producing strong readings.”

However, despite the positive economic outlook, Argo remains cautious of high valuations “in some sections of the Australian share market”.

“We feel that valuations are looking further stretched with some frothy areas of the market emerging,” it said.

“The larger cap end of the Australian market, outside of resources, looks to be where there may be some better value following another year of strong share price performance from smaller companies.”

During the first half of the financial year, Argo made additional investments of $99 million in companies including Aristocrat Leisure, Ramsay Health Care, Tabcorp Holdings, Telstra, Transurban and Westpac.

It received $49 million from sales of holdings in companies including Westfield and Woolworths.

The number of stocks held in the Argo portfolio reduced slightly in the first half to 96, and it now holds $5.6 billion in assets, including a cash balance of $235 million.

The company said it intended to offer a share purchase plan to shareholders “in the near future”. Its shares were trading 5 cents, or 0.6 per cent, lower in early morning trade at $8.31.