Shares of Australian financial company, Challenger, dropped 5.2% to AU$6.60 (US$4.28) on Tuesday, following the company’s announcement of a reduced dividend payout ratio guidance for fiscal 2024. The final dividend for fiscal 2023 also failed to meet expectations, leading to disappointment among some analysts.
Challenger reported a 13% increase in net profit for the 12 months ended June, reaching AU$287.5 million. While the final dividend saw a 4% rise to 24 Australian cents per share compared to last year, it fell at the lower end of the range predicted by industry watchers.
UBS, an investment bank, considered this a miss, with the 45% payout falling short of expectations. Additionally, the bank was surprised by the reduction in the dividend payout guidance range.
In response, Challenger explained that for fiscal 2024, it intends to target a dividend payout ratio of 30% to 50%, as opposed to the previous range of 45% to 50%. This adjustment will provide the company with greater flexibility to support its growth initiatives.
So far this year, Challenger’s shares have declined approximately 13%.