NAOS Small Cap Opportunities (ASX: NSC) Maintains 5-Cent Dividend Despite FY26 Portfolio Loss

NAOS Small Cap Opportunities Company declared a final quarterly dividend despite another year of negative portfolio returns.

The listed investment company will pay 1.25 cents per share, franked to 50%, for the June quarter. That lifts its FY26 distribution to 5 cents per share, also 50% franked overall.

Based on the August 20 closing price of 31.5 cents, the annual dividend yield was 15.87%. It was 18.52% after including the stated benefit of franking credits.

Dividend Outpaces Portfolio Performance

The distribution contrasts with a difficult year for the underlying portfolio. NAOS reported an after-tax loss of $6.60 million, improving from a $9.07 million loss in FY25.

However, its investment portfolio returned negative 9.86% for the year ended June 30. The S&P/ASX Small Ordinaries Accumulation Index gained 8.11% over the same period.

That represents a performance gap of 17.97 percentage points against the benchmark. The portfolio also lost 9.08% in FY25 and 22.93% in FY24.

Managing Director and Chief Investment Officer Sebastian Evans said: “We take full ownership of a deeply unsatisfactory portfolio result in FY26.”

Premium to Asset Value

Despite the portfolio decline, NSC finished FY26 trading 15.70% above its pre-tax net tangible assets. The company said its shares began the year at a significant discount.

For a listed investment company, the relationship between its share price and net tangible assets is an important valuation measure. Shares can trade above or below the value of the underlying portfolio.

Independent Chair David Rickards said several holdings had provided positive updates since year-end. The company identified MOVe Logistics, Big River Industries and MaxiPARTS among its core investments entering FY27.

The portfolio returned 0.66% in July, the first month of FY27. That figure represents only one month and follows three consecutive negative financial-year returns.

Dividend Reserve and Payment Timetable

NAOS had a profit reserve of 7.9 cents per share at June 30. That reserve provides context for the board’s decision to maintain the annual distribution despite the reported loss.

Since inception in December 2017, the company has declared dividends totalling 43.50 cents per share. The grossed-up total, including franking credits, was stated at 59.40 cents per share.

NSC shares will trade ex-dividend on September 10, with a record date of September 11. Dividend reinvestment plan elections close at 5 p.m. on September 14, ahead of payment on September 30.

Buyback Remains Active

The company also repurchased 906,890 shares during FY26 for $290,893. Since the buyback began in April 2019, it has acquired about 37.23 million shares.

That represents 22.03% of shares on issue. NAOS said buying shares at a discount is accretive to net tangible assets and remains part of its capital-management strategy.