The Investor Pulse Income Portfolio: Our Updates for FY26

In this article, we review our income portfolio and outlook for FY26 We’re taking a closer look at how our income portfolio performed over the past year, and what’s in store for dividend-focused investors in the next financial year. The past 12 months delivered solid overall results, driven by standout performers like Commonwealth Bank, Wesfarmers, and Goodman Group. These holdings reinforced the value of diversifying across resilient banks, high-quality industrials, and logistics-oriented real estate. Dividend growth set to moderate as sector divergence widens Looking ahead to FY26, the income landscape is expected to become more uneven. Market-wide dividends for the S&P/ASX 200 are forecast to decline by around 5%, before returning to growth of nearly 5% in FY26. The sharpest decline is expected in the resources sector, where dividends are projected to fall another 21%, a bigger drop than in earnings, as payout ratios tighten. The banking sector, in contrast, may see modest improvement, with dividends forecast to grow by 0.5%, though falling interest rates could pressure margins. Other sectors outside of resources and banks are expected to grow dividends by approximately 4.5%. In this environment, we believe sector selection and earnings quality will matter more than ever. Valuations stretched, payout ratios signal potential risk, but franking remains a key advantage From a valuation standpoint, the Australian market looks increasingly expensive for income. The ASX 200’s P/E ratio sits near 21x, above its long-term average of 15x, while the index yield has slipped to around 3.4%, down from the historical 4.5%. Most notably, the average payout ratio across the market surged to 128.5% in 2024, well beyond sustainable levels. Unless earnings rebound meaningfully, this raises the risk of widespread dividend cuts in the medium term. That said, franking credits remain a powerful feature of the Australian market. With that context in place, let’s now take a look at the stocks we recommended throughout 2024 and 2025—and how they’ve contributed to our income portfolio. Source: Investor Pulse, Research (2025) [1] ASX: JYC - Joyce Corporation Ltd (33.62%* ⬆️) Joyce Corporation has delivered a strong return of 33.62% since we first recommended the stock, reflecting a period of favourable market positioning and effective capital allocation. The company remains committed to rewarding shareholders, recently declaring a fully franked interim dividend of A$0.1050 per share, payable on April 4, 2025. The current trailing twelve-month dividend yield stands at 4.93%, supported by a robust earnings profile. Its TTM payout ratio of 94.92% is on the higher side, which may warrant attention going forward. While Joyce has maintained four consecutive years of dividend growth, its longer-term distribution history has included periods of variability. Nonetheless, a solid five-year annual earnings growth rate of 19% has underpinned its ability to sustain dividends. As long as earnings continue to grow at a healthy pace, the current payout appears manageable. We believe the yield remains attractive, though we continue to watch earnings momentum as a key indicator of future dividend stability. ASX: CBA - Commonwealth Bank of Australia (188.67%* ⬆️) Commonwealth Bank of Australia (CBA) has been a standout performer in our portfolio, delivering a remarkable total return of 188.67%*. In Q3 FY25, the bank reported an unaudited cash net profit after tax (NPAT) of approximately A$2.6 billion—broadly in line with the quarterly average from 1H25, during which A$6.38 billion in dividends were paid. While home loan arrears edged up slightly to 0.71%, overall credit quality across the portfolio remains solid. Looking ahead, the full-year FY25 dividend per share is forecast at A$5.00, which implies a grossed-up yield of around 4%. This payout is well supported by expected FY25 cash EPS growth of 5.2%. CBA’s strong capital position and consistent earnings profile reinforce its capacity to deliver reliable dividends, even in a changing economic landscape. We continue to view the bank as a core holding, given its resilience and disciplined balance sheet management. ASX: WES - Wesfarmers Ltd (117.71%* ⬆️) Wesfarmers has been a strong contributor to our portfolio’s capital growth, delivering a 117.71%* return to date. The group’s diversified operations have supported consistent performance, with revenue growing at an annual rate of 9.2% over the past three years. Currently, the dividend yield stands at 2.4%, which is notably below the five-year average of 3.4%. This reflects the strength of the share price appreciation, which has outpaced dividend growth and resulted in a lower relative yield. For FY25, the dividend per share is expected to be in the range of A$2.05 to A$2.16, translating to a grossed-up yield between 4% and 4.4%. The company is projected to maintain a high payout ratio of around 88%, highlighting its ongoing commitment to distributing profits to shareholders. Looking ahead, dividend growth is anticipated to remain supported by corresponding growth in earnings per share, helping to align shareholder returns with the company’s operational momentum. ASX: SGP - Stockland Corporation Ltd (51.62%* ⬆️) Stockland Corporation has delivered a solid return of 51.62%* for the portfolio, supported by steady performance across its diversified property portfolio. In its 1H25 results, the company reported Funds from Operations (FFO) of A$298 million—a 6.7% decline, largely due to asset recycling in the prior period. That said, underlying performance remained strong, with comparable FFO growing 3.5%, thanks to solid results from the logistics and communities’ rental segments. Stockland has declared an unfranked interim distribution of 17.2 cents per share, with an ex-dividend date of June 27, 2025. The forecast full-year FY25 dividend per share is 25.06 cents, translating to a yield of 4.90%. The 1H25 distribution reflected a payout ratio of 76% of post-tax FFO, highlighting a disciplined balance between rewarding shareholders and funding future growth. Backing this approach is a significant residential lot pipeline of around 96,400, positioning the company well for continued development-led earnings over the long term. ASX: AMC - Amcor CDI (-11.50%* ⬇️) Amcor CDI has recorded an 11.50%* decline since our initial recommendation, with its share price down 7.0% year-to-date in 2025. While this has weighed on total returns, the stock continues to offer an appealing dividend yield—currently around 5.30%, with some estimates as high as 5.6% or 5.76%. This remains well above its five-year average of 4.38%, highlighting the company’s consistent income profile. The latest dividend payment of US$0.128 per share was made on May 22, 2025, although it was unfranked. Amcor’s payout ratio stands at a relatively high 90.7%, supported by expected FY25 adjusted EPS in the range of US$0.72 to US$0.76. Despite ongoing dividend payments, recent share price softness appears to reflect broader concerns, particularly around consumer demand and its effect on the packaging sector. We are closely monitoring Amcor at this stage, assessing whether its income strength can be better reflected in future market performance. ASX: GMG - Goodman Group (143.77%* ⬆️) Goodman Group has truly stood out, delivering an impressive 143.77%* gain driven by its sharp focus on high-growth logistics and data centre sectors. The company reaffirmed its FY25 Operating EPS growth target of 9%, following a strong first-half operating profit of A$1.2 billion. As of March 31, 2025, Goodman’s total property portfolio was valued at A$85.8 billion, supported by a healthy occupancy rate of 96.5% and solid like-for-like net property income growth of 4.5% across its partnerships. The group’s significant development pipeline, worth A$13.7 billion, with over half of that invested in data centres, reflecting its commitment to expanding in these high-demand areas and building future earnings capacity. Goodman pays dividends twice a year, with a full-year FY25 distribution forecast at 30 cents per stapled security. This reflects a consistent earnings track record and a long-term growth strategy that positions the company well going forward. ASX: MQG - Macquarie Group Ltd (91.32%* ⬆️) Macquarie Group Ltd has delivered a robust 91.32%* gain, reflecting the resilience of its diversified business model. In FY25, the group reported a net profit after tax of A$3.715 billion, underpinned by strong client engagement and effective funding strategies. The company declared a final ordinary dividend of A$3.90 per share, 35% franked, resulting in a full-year payout ratio of 67%, well within its stated target range of 50-70% of net earnings. ASX: BOQ - Bank of Queensland Ltd (7.23%* ⬆️) Bank of Queensland Ltd has delivered a modest 7.23%* gain, reflecting the ongoing challenges faced by regional banks. In 1H FY25, the bank reported cash earnings of A$183 million, up 13% from the previous period, with basic cash EPS rising 6% to 27.9 cents. However, its Return on Equity (ROE) remains at 4.7%, noticeably below the banking sector average of 9.35%, while its Net Interest Margin (NIM) of 1.56% also trails the sector average of 1.78%. Despite this, the bank declared a fully franked interim dividend of 18.0 cents per share for 1H25. The last full-year dividend was A$0.34, with a forecast gross dividend payment of A$0.50 for FY25. These lower profitability measures compared to peers underline the competitive pressures and strategic changes Bank of Queensland is managing, which may limit the pace of dividend growth in the near term. We are currently reviewing Bank of Queensland’s position and may reconsider our rating as we assess how the bank navigates these challenges moving forward. ASX: NAB - National Australia Bank Ltd (113.74%* ⬆️) NAB has been a strong contributor to our portfolio, delivering a robust 113.74%* gain and demonstrating resilience within the major banking sector. In 1H FY25, NAB reported cash earnings of A$3.58 billion, up 1% year-on-year, alongside a statutory net profit of A$3.4 billion. The Net Interest Margin remained steady at 1.70%. A key highlight was NAB’s impressive deposit growth, with household deposits rising 1.3 times faster and business deposits 1.6 times faster than the overall banking system. On the flip side, loan arrears continued to increase, with housing loans overdue by 30+ days reaching 1.87% as of March 2025. NAB declared a fully franked half-year dividend of 85 cents per share, with a payout ratio of 71.8%, comfortably within its target range of 65-75% of cash earnings. While dividend payments remain stable for now, the sector’s elevated payout ratios suggest NAB may hold off on significant dividend increases until the second half of FY26, reflecting a broader period of consolidation for dividend growth. ASX: TWR - Tower Ltd (18.40%* ⬆️) Tower Ltd has contributed an 18.40%* gain to our portfolio, driven by a strong 1H25 performance. The result benefited from unusually mild weather, which kept business-as-usual claims low. Underlying Gross Written Premium (GWP) grew 4% compared to the first half of FY24, while underlying Net Profit After Tax (NPAT) reached NZ$61.7 million, comfortably exceeding expectations despite one-off costs of NZ$49.7 million tied to legacy earthquake claims and customer remediation. The company declared a fully imputed interim dividend of 8 cents per share. Tower’s dividend policy targets a payout ratio between 60% and 80% of adjusted earnings, with the full-year FY25 dividend per share estimated at 16 cents, fully imputed. This demonstrates Tower’s commitment to consistent shareholder returns, supported by solid underlying performance even as it manages historical one-off expenses. ASX: HM1 - Hearts and Minds Investments Ltd (-0.65%* ⬇️) Hearts and Minds Investments Ltd has experienced a slight decline of 0.65%* since our recommendation. Despite this, the company reported strong investment performance and a notable rise in profits for the half year ending December 31, 2024. Since its inception in November 2018, Hearts and Minds has delivered a solid annualised return of about 12.3%. The Board recently declared an increased fully franked interim dividend of 8.0 cents per share, payable in April 2025. The annualised fully franked dividend yield stands at 5.6%, with total FY25 dividends projected at 15.5 cents per share, fully franked. With a payout ratio of 65%, the company strikes a balance between returning income to shareholders and retaining capital for future investment. The modest capital decline, despite strong underlying returns and a growing dividend, likely reflects broader market volatility or valuation factors specific to listed investment companies. ASX: PIA - Pengana International Equities Ltd (0.00%* ➡️) Pengana International Equities Ltd has held steady with no change since our recommendation. In 1H FY25, the company reported a net profit after tax of A$26.9 million, marking a significant increase compared to the previous period, with earnings per share at 10.5 cents. The company has consistently paid fully franked quarterly dividends of 1.35 cents per share. For FY25, the annual dividend target is set at 5.4 cents per share, fully franked at a 30% tax rate. This equates to a yield of 4.3%, or 6.2% when grossed up for franking credits. With substantial profit reserves of 88.7 cents per share and franking reserves of 14.6 cents per share, Pengana is well-positioned to maintain fully franked quarterly dividends through to FY27, supporting a strong outlook for consistent income generation. ASX: IGL - IVE Group Ltd (31.88%* ⬆️) IVE Group Ltd has delivered a strong 31.88%* gain since our recommendation, reflecting solid operational performance. In 1H FY25, the company reported an IFRS net profit after tax (NPAT) of A$27.1 million, more than double the prior corresponding period. Revenue increased by 0.4% to A$507.8 million, while EBITDA grew 12.6% to A$74.1 million. Underlying NPAT rose 29.1% to A$29.3 million, with earnings per share reaching 19.0 cents. The company also improved its operating cash flow conversion to 92.0%, while net debt was reduced to A$121.4 million. In response to these strong results, IVE Group raised its FY25 underlying NPAT guidance to a range of A$47 million to A$50 million and reaffirmed its fully franked interim dividend of 9.5 cents per share. These outcomes highlight a company with robust financial health and a clear ability to deliver sustainable returns to shareholders. ASX: SHA - SHAPE Australia Corp Ltd (43.10%* ⬆️) SHAPE Australia Corp Ltd has delivered a solid 43.10%* gain since our recommendation. The company’s unaudited FY25 trading update, covering the period ending June 30, 2025, points to robust growth, with revenue expected to reach between A$950 million and A$960 million, a strong 14% increase on FY24. EBITDA is forecast to rise 25%, landing between A$32.0 million and A$33.0 million, while NPAT is projected between A$20.5 million and A$21.5 million, up 31%. SHAPE also recorded its highest project wins in its 35-year history and has a strong forward pipeline valued at around A$4.0 billion, providing solid visibility for future earnings. The company has announced a fully franked interim dividend of 10 cents per share, payable on March 14, 2025. The forward annual payout is expected to be 20 cents per share, with a payout ratio between 78.7% and 91%. This combination of strong growth and a high payout ratio highlights a company effectively balancing ambitious expansion with delivering direct returns to shareholders. ASX: SUL - Super Retail Group Ltd (-12.00%* ⬇️) Super Retail Group Ltd has experienced a 12.00%* decline since our recommendation. For 1H FY25, ending December 28, 2024, the company reported sales of A$2.1 billion, up 4%, while group like-for-like sales grew 1.8%. However, underlying NPAT fell 9% to A$130 million compared to the prior corresponding period. The company declared a fully franked interim dividend of 32 cents per share. The next dividend is projected at A$0.37, with an ex-dividend date of September 9, 2025, and payment scheduled for October 17, 2025. This supports a current dividend yield of 4.84%. Super Retail Group’s dividend policy targets a payout ratio between 55% and 65% of underlying NPAT, fully franked. While the strong dividend appeal remains, we are currently re-evaluating SUL to determine if its share price action continues to offer a viable investment opportunity amid the ongoing margin pressures and challenges faced by consumer discretionary businesses. ASX: SRV - Servcorp Ltd (4.45%* ⬆️) Since our recommendation, Servcorp Ltd has delivered a steady gain of 4.45%*. Their 1H FY25 results, announced on February 19, showed impressive momentum, with underlying free cash flow up 13% to A$40.5 million. Meanwhile, underlying EPS climbed to 16.5 cents, reinforcing the company’s strong operational performance. Over the past five years, Servcorp has consistently rewarded shareholders with an average dividend yield of 6.65% and a payout ratio around 69.2%. This track record highlights their ongoing commitment to returns, even though the interim dividend carried lower franking credits. ASX: KOV - Korvest Ltd (1.83%* ⬆️) Since our recommendation, Korvest Ltd has seen a modest gain of 1.83%*. In 1H FY25, the company reported a slight revenue decline of 1.1%, totalling A$51.1 million, while net profit fell by 28% to A$4.1 million, partly due to around A$670,000 in one-off costs. Despite these challenges, Korvest declared a fully franked interim dividend of 25 cents per share, with an ex-date of February 13, 2025, and payable on March 7, 2025. The company’s trailing twelve-month dividend yield stands at a solid 6.19%, supported by a payout ratio of 81.35%. Management expects project activity to pick up in the second half of FY25 and is optimistic that full-year profit will surpass FY24 levels. While the high payout ratio and recent profit dip highlight the importance of future earnings, Korvest remains committed to delivering steady dividends. *Past performance is not indicative of future performance.