Future Generation returns top 20%

Future Generation Australia has increased its fully franked interim dividend after it delivered a 20.1% total shareholder return over the past year.

The company lifted its interim dividend to 3.8 cents per share, fully franked, taking the annualised payout to 7.6 cents per share, a 5.6% increase on the prior year. Based on its closing share price on July 7, the annualised dividend yield stands at 5.7%, or 8.1% including franking credits.

The increase marks the eleventh consecutive annual dividend rise since Future Generation Australia listed in 2014. The company said its profits reserve of 41.8 cents per share provides around 5.5 years of dividend coverage.

Future Generation Australia chair Phillip Lowe said the result reflected the strength of the company's investment strategy and unique business model.

"Future Generation Australia's long term investment portfolio performance has enabled the board to increase the fully franked interim dividend to 3.8 cents per share," Lowe said.

"The increased dividend demonstrates the strength and sustainability of the company's model, delivering value for shareholders while supporting social impact partners working to improve outcomes for Australia's most vulnerable children."

Since inception, the portfolio has delivered annualised returns of 9.1%, outperforming the S&P/ASX All Ordinaries Accumulation Index by 0.9%, per annum, while doing so with less volatility than the broader market.

Future Generation chief investment officer Lee Hopperton said the fund's manager selection process and portfolio construction helped deliver strong long-term returns while managing risk.

"We are pleased to have outperformed the market since inception. Our diversified portfolio of leading active fund managers, selected by the experienced Investment Committee, is designed to reduce concentration risk and volatility while generating attractive risk-adjusted returns," Hopperton said.

The portfolio is managed by 16 active fund managers and has significantly lower exposure to Australia's largest listed companies than the benchmark, with the top 10 stocks accounting for just 16.6% of the portfolio compared with 45.3% of the index.

Future Generation also maintained its philanthropic focus, with fund managers continuing to waive management and performance fees, enabling the company to donate 1% of net assets annually to Australian charities without reducing shareholder returns.

The company said it has now donated $100 million to charitable organisations since inception, supporting programs focused on vulnerable children, youth mental health and improving economic outcomes for women.