Plato Income Maximiser (ASX:PL8) reported a first-half FY26 profit of AUD 28.4 million for the six months ended December 2025, with directors highlighting ongoing outperformance versus the broader Australian share market and continued monthly dividend payments.
Half-year performance and income
Portfolio manager Don Hamson said the half-year profit was about AUD 11 million lower than the prior corresponding period, attributing the change primarily to weaker market conditions in the Australian market in the December half of 2025 versus the December half of 2024. Despite that backdrop, he said the portfolio rose 4.8% over the six months, compared with a benchmark return of about 4.2%, leaving the company “a bit over a half percent ahead of the market” for the period.
On net tangible assets (NTA), Hamson said the company started the period at just over AUD 1.15 per share. Investment returns added roughly AUD 0.04, costs were less than AUD 0.001 per share, and dividends of AUD 0.033 were paid, resulting in a pre-tax NTA of just over AUD 1.16 per share at period end.
Dividend policy, franking, and profit reserves
Hamson reiterated the vehicle’s focus on steady, fully franked income and noted that the strategy has paid monthly fully franked dividends for years following its listing in May 2017, after an initial period to build reserves. He also said the company has maintained its dividend level over the past four years even as the market’s overall dividend dollar value has fallen from a 2022 peak.
In the shareholder Q&A, management addressed questions about when dividends might increase and the significance of the company’s profit reserve. Hamson said the profit reserve in part reflects that “capital growth is considered profit,” and he cautioned against paying dividends purely out of capital growth. He emphasized that the key constraint is franking credits, noting the franking account balance “has actually been going down, not up,” even though it is replenished as the portfolio receives franked dividends from holdings.
Hamson said the company’s ability to lift dividends is tied to dividends received from underlying investments, which in turn depend on company profitability—particularly in cyclical commodity sectors. He also noted that the company has effectively been paying out more in dividends than it has received for the past couple of years because it maintained dividends at the higher 2022 level while market dividends declined thereafter. As a result, he said the company would need to rebuild reserves—especially franking—before considering an increase.
Director Chris Meyer added that partially franked or unfranked dividends are within the board’s “toolkit,” though he said it was not a current consideration and would depend on whether maintaining or increasing the cash dividend became the most important priority for shareholders.
Market yield trends and demand for monthly income
Hamson said the broader market yield has declined over the past couple of years as share prices rose faster than dividends. He cited a calendar 2025 gross yield for the S&P/ASX 200 of about 4.2%, below historical norms he described as mid-5% to 6% in some years. By comparison, he said Plato Income Maximiser generated about 7% over the same 12-month period, comprising a 4.9% cash yield and a 2.1% franking yield.
He also pointed to strong demand for regular income, noting the stock had recently traded at a “significant premium” to NTA, at times around a 20% to 25% premium. Hamson cautioned that a higher share price reduces the company’s yield for new investors.
Reporting season takeaways: banks, miners, and “dividend traps”
Hamson provided an update on key dividend and earnings developments from the reporting season, with particular focus on dividends and payout sustainability.
- Commonwealth Bank: Hamson said CBA delivered a “strong result” with cash profit up 6% year-on-year and 2% to 3% above market expectations. He said the interim dividend rose 4%, was fully franked, and implied an annual gross yield around 4.5% at the time—around the market level.
- JB Hi-Fi: Hamson said earnings and sales were both up 7%, with a final dividend of AUD 2.10 and a 75% payout ratio, describing it as a long-standing top performer in the portfolio.
- AGL: He said AGL was trading on a “pretty good” yield, citing a 7.7% gross yield, though he was surprised earnings were not stronger given electricity price dynamics.
- Telstra: Hamson said Telstra reported an 8% increase in NPAT and another small increase to its dividend, and he noted it was “coming back” as a yield stock, trading around a 5.8% gross yield.
- Mining companies: Hamson said a notable positive from the season was that dividends from miners appeared to be stabilizing and rising. He cited BHP’s dividend increase of 46% and Rio Tinto’s increase of 13%, and said Fortescue also increased its dividend after his slides were prepared. He also noted BHP’s increasing exposure to copper (more than 50% of earnings, by his account) and referenced a AUD 4 billion sale of most of its silver production, which he said supported dividends.
Hamson also warned about high-yield stocks that ultimately cut payouts, citing Treasury Wine, IDP Education, and Spark as examples of companies that had appeared to offer “juicy” yields but then cut dividends—Treasury Wine and IDP Education, he said, by 100%. He said Plato uses a dividend-cut prediction model designed to help avoid such “dividend traps.”
Outlook: dividend cuts model and economic signals
Looking forward, Hamson said the firm’s market-level read of dividend cut probabilities was “slightly better than the long-term average,” which he interpreted as supportive for dividends overall. He said if dividend cuts remain lower, it would likely imply dividends can increase, adding that early signs of rising miner dividends were encouraging.
On the macro backdrop, Hamson pointed to persistent inflation pressures in essential items such as housing-related costs, utilities, and food, and said he expected at least one more RBA interest rate increase this year, possibly two. He said headline inflation was around 3.8%, above the RBA’s 2% to 3% target band.
In response to a question about portfolio oversight during volatility, Hamson said the team reviews holdings daily, updating prices, models, and valuations each day, and that recent volatility has been more at the individual stock level than at the broader market level.
About Plato Income Maximiser (ASX:PL8)
Listed Investment Company
