Hoping to bag the supersized AFIC dividend? You'd better be quick

Time is running out to bag AFIC's big dividend…

| More on:
a group of people run towards the camera wearing business and smart casual clothes.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Australian Foundation Investment Co has long been a favourite for passive income investors
  • AFIC has kept its dividend steady for years, but investors will be treated to a big pay rise next month
  • Investors don't have long to get in on the action

The Australian Foundation Investment Co Ltd (ASX: AFI), or AFIC for short, is an ASX-listed investment company (LIC) that has always had a strong reputation for providing dividend income.

AFIC has been around for decades. Before the emergence of the exchange-traded fund (ETF), LICs like AFIC were one of the only ways to access a diversified portfolio of blue-chip ASX shares, managed on investors' behalf.

Although ETFs have come along and given investors choice in this area, AFIC is still chugging along. The LIC has managed to give investors an average return of 9.8% per annum over the past ten years. That return includes the value of AFIC's dividends.

Here is the company's recent share price history:

Created with Highcharts 11.4.3Australian Foundation Investment Company PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

So AFIC has paid out two dividends per year for decades now. Unlike many ASX dividend shares, AFIC didn't skip any shareholder payments during the worst years of the global financial crisis, or the pandemic.

And its latest interim dividend is coming investors' way.

AFIC's supersized interim dividend is inbound

Back on 23 January, AFIC delivered its half-year earnings report. This included the announcement that the company would hike its interim dividend for the first time in many years.

In 2022, investors enjoyed an interim, fully franked dividend of 10 cents per share. That's the same payout AFIC had doled out every February since 2016.

But this year, the company announced a big hike to its interim dividend. Investors can now look forward to receiving 11 cents per share, fully franked, on 24 February next month. That's a 10% increase over 2022's interim dividend payment.

However, if an investor wishes to secure this dividend payment, then they had better be quick. AFIC is scheduled to trade ex-dividend for this payment this Thursday, 2 February.

That means that any investors who don't hold AFIC shares by that date will miss out on this upcoming dividend. So you've got today's session, and tomorrow's to buy AFIC shares if you want to bag this dividend.

Thus, we can expect a big drop in the AFIC share price on Thursday, reflecting the value of this dividend leaving the market.

This latest dividend will give AFIC a dividend yield of 3.24%, based on the current share price of $7.71 (at the time of writing).

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Happy woman and man looking at an iPad.
Dividend Investing

Forget term deposits! I'd buy these two ASX 200 shares instead

Term deposits aren’t as attractive to me these days.

Read more »

Man holding Australian dollar notes, symbolising dividends.
Dividend Investing

3 ASX dividend shares to buy with $7,000 and hold for a decade

Let's see why analysts think these shares would be great additions to an income portfolio.

Read more »

Woman relaxing on her phone on her couch, symbolising passive income.
Dividend Investing

Own IVV ETF or other iShares ASX ETFs? It's dividend payday for you!

Thinking TGIF? There's a better reason to celebrate. It's dividend payday for iShares investors!

Read more »

Hand holding Australian dollar (AUD) bills, symbolising ex dividend day. Passive income.
Bank Shares

This is the ASX bank stock with the largest dividend yield right now

Looking to ASX bank stocks for dividend income right now?

Read more »

A group of businesspeople clapping.
Dividend Investing

2 of the best ASX dividend shares to buy now

Bell Potter has good things to say about these income options.

Read more »

woman on phone
Dividend Investing

Is the Telstra share price a buy for passive income?

These are the two main factors I’d look at.

Read more »

Smiling woman with her head and arm on a desk holding $100 notes out, symbolising dividends.
Dividend Investing

2 cheap ASX dividend stocks to buy before it's too late

Analysts think these shares are cheap buys. Let's see what they are saying about them.

Read more »

Young couple at the counter of a hardware store.
Dividend Investing

Here's how often Wesfarmers stock increases its ASX dividend

Wesfarmers has quietly been delivering for income investors...

Read more »