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DJW - DJERRIWARRH INVESTMENTS LIMITED


brickwalls
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Djerriwarrh, the yield hungry listed investment company part of the Australian Foundation Investment Co stable, has been forced to slash its final dividend to shareholders in the wake of the unprecedented volatility on the the sharemarket while it sold down key blue chips as its call options were exercised.

 

Djerriwarrh said its net operating profit, which is the key component of its dividend, was $28.1m, down 25.5 per cent from fiscal 2019. Net operating result per share was 12.54 cents, down from 16.95 cents per share, while net profit was weaker by 4.1 per cent to $32.9m. Revenue from its operating activities, drawn from investing in Australian equities as well as writing call and put options to help supplement its income, was down 28.2 per cent in 2020 to $28.6m.

 

Djerriwarrh has always prided itself on its ability to produce strong dividend returns for its shareholders, many of which are retirees, but the wild swings in share prices since the coronavirus pandemic emerged this year has dented its ability to generate income.

 

It declared a final dividend of 5.25 cents per share, down from 10 cents for the same time last year, payable on August 28. This brings total dividends for the year to 14 cents per share, down from 20 cents per share in 2019.

 

Djerriwarrh said under normal circumstances the final dividend would be close to the net operating result for the half of 4.9 cents per share, but the board considered the difficult conditions brought about by COVID 19 and decided to use a small amount of reserves to bring the final dividend to 5.25 cents. Major sales for the 12 months period were mostly as a result of the exercise of call options, including its positions in CSL, Wesfarmers, Commonwealth Bank and National Australia Bank. There was also a reduction in its holding of James Hardie and positions exited in the year included AUB Group, Ansell, Worley and Treasury Wine Estates.

 

... not a happy time to run an options based yield strategy, it seems.

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  • 5 months later...

a bit tricky ; DJW looks for enhanced yield [ ] achieved through a bias to investing in companies with higher dividend income, produced over the short and long term, as well as using option strategies to generate additional income and realised capital gains.

 

In the Half Yearly results out today, there was a significant decline in income from investments to $9.6 million from $17.9 million as companies suspended or reduced dividends through the period. The biggest reductions came from the major banks and BHP, whilst Sydney Airport was amongst a number of companies in the portfolio that did not pay a dividend during the half. -income from option activity was $6.1 million, up from $3.3 million.

Will pay an interim dividend of 5.25 cents per share fully franked, down from 8.75 cents per share fully franked.

Operating a DRP and also a SPP announced for Feb

 

 

Adjustments to the portfolio: In particular, as the market shifted its focus to "value" opportunities following the generally strong increase in the overall market, the share prices of these better quality companies which began to weaken provided Djerriwarrh with some good long term buying opportunities. (also, unstated, is a reduction in exposure to financials, especially banks, plus a broadening of what is loosely termed "industrials")

 

Acquisitions Cost ( 000)

CSL ............. 20,095

ASX ..............18,113

Woolworths .... 11,993

Mirvac Group ... 7,024

Transurban ..... 7,009

 

Sales Proceeds ( 000)

ANZ Banking Group .......12,369

National Australia Bank .. 11,239

Goodman Group# .......... 7,895

South32 (complete sale) .. 6,011

Macquarie Group# .........5,885

#Sales as result of the exercise of call options

 

 

New Companies Added to the Investment Portfolio

Mirvac Group

ResMed

EQT Holdings

Fineos Corporation

Pinnacle Investment Management

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  • 6 months later...

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