Company Interview / Argo ups dividend as profit rises

Key Points:

Argo Investments reports rising profits, record dividend, and strong portfolio returnsUnderweight strategy on Commonwealth Bank (ASX:CBA), profit-taking in Technology One (ASX:TNE)Redeployed into Xero (ASX:XRO), WiseTech Global (ASX:WTC), and increased positions in other major banksDefensive portfolio focus, anticipating rotation to resources and healthcare, with market staying range-bound

Argo Investments has reported a strong financial year, with net profit rising to $259.8 million, from $253 million, and revenue climbing to $285.8 million. The portfolio returned over 13% on a net tangible asset basis. Argo has increased its annual dividend to a record $0.37 per share, up 7%, reflecting growing earnings per share of 34.1 cents. Jason Beddow states that the company is in a robust position after three years of strong market returns, supporting the increased, sustainable dividend.

Beddow highlights ongoing geopolitical and macroeconomic risks, including US political developments and tariff changes, but points out that the company's portfolio has remained resilient. He notes Argo is underweight on Commonwealth Bank (ASX:CBA), having trimmed the position due to valuation concerns, but CBA remains Argo’s second largest holding. Portions of the Technology One (ASX:TNE) investment have also been sold, with proceeds redeployed into other tech names such as Xero (ASX:XRO) and WiseTech Global (ASX:WTC). Exposure to National Australia Bank (ASX:NAB), ANZ (ASX:ANZ), and Westpac (ASX:WBC) has increased, balancing out reduced weight in CBA.

According to Beddow, the portfolio strategy remains defensive, with strong emphasis on income and fully franked dividends. He expects some rotation into resources and healthcare, but predicts the index will remain largely range-bound through the remainder of the year.