• BTI ordinary dividend policy to be 4% per annum of pre-tax NTA paid half-yearly
  • BTI to also pay a special dividend after ~$140 million in asset sales
  • Fund cashed up to invest in out of favour technology assets 

There hasn’t been much to smile about in financial markets of late, especially the high growth tech sector which has seen a broad sell-off as investors head towards value stocks amid rising economic uncertainty.

The S&P/ASX All Technology Index (XTX) has fallen ~6% in the past month and is down ~31% year to date.  However, Bailador Technology Investments (ASX:BTI) shareholders can do a happy dance today after the tech-focused growth capital fund announced a new dividend policy which commits to paying semi-annual distributions.

The ordinary dividend policy will be 4% pa of pre-tax NTA, payable half yearly – that is 2% of June 30 pre-tax NTA payable upon finalisation of annual financial statements and 2% of December 31 pre-tax NTA payable upon finalisation of half-yearly financial statements.

Breaking down the dividend, investors should pay close attention to the target yield, which is 4% of BTI’s pre-tax NTA. The target yield is significant because BTI’s share price is currently trading at a ~35% discount to BTI’s last reported NTA of $1.99 as at April 30, 2022.

This means any investor holding BTI shares at the closing price on May 31 of $1.38 stands to receive an effective 5.8% pa fully-franked yield on their investment.

As a further windfall, BTI has also announced a special dividend will be paid on top of this ongoing dividend at the next results. This special dividend adds another 2% of NTA paid on a fully-franked basis, which equates to a further 2.8% fully-franked yield on BTI’s closing share price.

So all up, an investor today is potentially holding a cheque for a 8.6% fully-franked yield based on BTI’s May 31 closing price. The dividends are due to be announced with BTI’s FY22 results in August.

At the time of writing, BTI was up a 3.62% to $1.43, so the opportunity is still well and truly there for the tech-savvy investors looking for a combination of high-growth investment and strong cash returns.


Strong growth to support dividend

Since listing on the ASX in 2014 BTI has steadily been growing its NTA with chairman David Kirk saying the fund was now in the position to implement a dividend policy.

“The BTI portfolio has reached a stage of development where we are able to balance holdings in private companies and cash, in a manner that allows for payment of a regular cash dividend, and distribution of franking credits,” Kirk said.