Future Generation Investment Company Just Delivered Another Dividend Raise

Future Generation Investment Company Ltd (ASX: FGX) has just delivered another dividend increase in its FY18 report.

Future Generation Investment is a listed investment company (LIC) that looks to give shareholders exposure to leading Australian fund managers without paying management fees or performance fees. It also aims to pay 1% of net assets to youth charities each year.

What Future Generation Investment Company Reported

The LIC announced for the year to December 2018 there was an operating profit before tax of $31.5 million and an operating profit after tax of $23.2 million.

In the year to December 2018 the Future Generation portfolio fell 3.8% compared to S&P/ASX All Ordinaries Accumulation Index which dropped 3.5%. However, since inception in September 2014 Future Generation has outperformed the index by 2.3% per annum.

During the period, Future Generation completed a capital raising of $52.1 million with regular investors and institutions, which will increase the annual donation to charities focused on children and youth at risk by $0.52 million.

Future Generation Chairman Jonathan Trollip said: “In these volatile times, this successful capital raising is an endorsement of FGX’s pro bono fund managers, the highly diversified nature of the FGX investment portfolio and the structure of the portfolio of managers.”

During 2018, the value of management fees and performance fees that fund managers gave up totalled $6.4 million and the estimated value of the service providers working for free totalled $0.7 million.

Future Generation made a $4.3 million donation in October 2018, up from $3.8 million in 2017. The company is on track to give a $4.5 million donation payment in October 2019. It has donated $16 million since inception.

Future Generation Dividend

The Future Generation Board decided to declare another fully franked dividend of 2.3 cents per share, bringing the total dividend to 4.6 cents per share, which is an increase of 4.5% compared to a year ago.

Chairman Mr Trollip said: “The increased full year dividend supports the Company’s goal of delivering on its investment objectives of providing an increasing stream of fully franked dividends to shareholders while protecting their capital and delivering capital growth.”

Is Future Generation a buy?

I like both the philanthropic nature of Future Generation and that it aims to pay a growing dividend. I own a small piece of Future Generation and will look to buy more when the market is weak or if a discount to its assets opens up.

Disclosure: At the time of publishing Jaz owns shares of Future Generation Investment Company, but that could change at any time. 

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