The Argo Investments Ltd (ASX: ARG) share price is under the spotlight after the business reported its FY25 result.
Argo is one of the largest listed investment companies (LICs) on the ASX, giving investors exposure to a strong portfolio of ASX shares.
FY25 result
Let’s look at the main highlights from the annual result for the six months to 30 June 2025:
- Revenue including special dividends increased by 5.1% to $285.8 million
- Net profit rose by 2.7% to $259.8 million
- Earnings per share (EPS) increased 2.4% to $0.341
- Final dividend per share up 11.1% to $0.20
- LIC capital gain component up 133% to $0.07
- Full-year dividend per share increased 7.25% to $0.37
Argo said the investment revenue was boosted by better-than-expected dividends from numerous companies in the investment portfolio and an increase in special dividends it received.
The business decided to significantly hike the dividend because of the continued growth of Argo’s franking balance and recognising that franking credits are more valuable in shareholders’ hands.
Argo said it’s focused on sustainably growing fully franked dividends and “for the foreseeable future accelerating the distribution of accumulated franking credits”.
During the financial year, it purchased $335 million of investments, which included new holdings and adding to existing positions. In the same period, it received $370.5 million of sales from investments, including $48 million in Commonwealth Bank of Australia (ASX: CBA).
Some of the new positions in the portfolio include Dexus (ASX: DXS) and Xero Ltd (ASX: XRO). Some of the positions it fully exited include Diversified United Investment Ltd (ASX: DUI) and Mac Copper CDI (ASX: MAC).
Investment performance
The LIC reported that it delivered a return of 13.3%, measured by the net tangible assets (NTA) return after all costs and adjusted for company tax paid, slightly underperforming the S&P/ASX 200 Accumulation Index (ASX: XJOA) which delivered an increase of 13.8%.
It outperformed the index over the prior financial years, with a compound annual return of 12.1%, compared to 11.8% per year for the index.
Its holding in TechnologyOne Ltd (ASX: TNE) was the biggest positive contributor to Argo’s performance, surging more than 120% over the year.
The biggest cause of underperformance was its underweight holding on CBA shares compared to the index. Argo reduced its exposure to CBA during the year.
Outlook for the Argo share price
Argo believes geopolitical and macroeconomic risks “remain elevated” and “should not be overlooked”. With that in mind, the LIC highlighted the “defensive and diversified nature” of its portfolio and helps ensure it’s less exposed to sharp market swings.
It also said it remains focused on delivering a reliable income stream to shareholders. Argo sees this as particularly important as interest rates have begun to fall and the outlook for dividends across the broader ASX share market is “flat to declining”.
It’s currently trading at a discount of more than 10% to its latest weekly NTA update, so I think this could be a good time to invest for interested investors, among a few other ASX dividend shares.
