Future Generation Australia Limited (ASX:FGX) has a Dividend Reinvestment Plan (DRP) in operation for its upcoming 3.8 cent fully franked interim dividend. The listed investment company (LIC) says the plan operates without a discount, with shares priced off market trades over four trading days from the ex-dividend date.

Latest developments

Future Generation Australia declared a fully franked Interim Dividend of 3.8 cents per share, up 5.6% from the 3.6 cent interim paid in 2025. Chair Dr Philip Lowe said the company's long-term investment portfolio performance had enabled the board to increase the dividend.

The dividend is scheduled to be paid in November, with the DRP election deadline falling shortly after the record date, as set out in the company's dividend notice.

The company's August investment update showed the portfolio's return since inception in 2014 at 9.3% a year, compared with 8.4% a year for the S&P/ASX All Ordinaries Accumulation Index.

Key numbers

Future Generation Australia's two most recent dividends before the latest declaration, paid in November 2025 and May 2026, were each 3.6 cents per share and fully franked. The newly declared 3.8 cent interim dividend is also fully franked, giving an annualised rate of 7.6 cents per share.

The value of franking credits depends on each investor's tax position.

According to the August investment update, Net Tangible Assets (NTA) were 137.64 cents per share before tax and 137.48 cents after tax, with total assets of $573.5 million. The company reported a profits reserve of 41.8 cents per share, equal to about 5.5 years of dividends at the annualised interim rate of 7.6 cents.

About the company

Future Generation Australia describes itself as a philanthropic LIC. It gives investors diversified exposure to Australian equities through a portfolio of fund managers, while supporting Australian not-for-profit organisations focused on children and young people experiencing, or at risk of, adversity. The company reports cumulative donations of $54.9 million since inception.

Its portfolio is spread across different investment styles, with the August update showing absolute bias equities of 56.5%, long equities of 37.2% and cash of 6.3%. As a LIC, its dividends are paid from profits and franking credits built up from realised gains and investment income.

How the DRP works

Under FGX's DRP rules, shares are priced at the volume-weighted average Market Price (VWAP) of FGX shares sold on the ASX over the four trading days commencing on the ex-dividend date, less any discount the board determines. For the latest interim dividend, the company states the DRP is in operation without a discount.

The rules provide for new shares to be issued to participants and quoted on the ASX, and the company applied for Quotation of 930,280 new DRP shares after the dividend paid in May 2026. Participation can be full or partial, and entitlements are rounded down to the nearest whole share, with any residual balance retained without interest in the participant's plan account. The DRP rules and dividend notice set out the full terms.

Dividend context

FGX's fully franked dividends have increased gradually: the half-yearly payment moved from 3.5 cents in late 2024 and 2025 to 3.6 cents and now 3.8 cents. The company reports a profits reserve that the board can draw on in determining future payouts.

Reinvesting through the DRP allows participating holders to receive additional shares instead of cash. Because the DRP is priced from market trades rather than NTA, the DRP price may differ from the underlying asset backing.

What comes next

The next steps for the interim dividend are the ex-dividend date, the DRP election deadline and the payment in November, as disclosed in the company's dividend notice. Future Generation Australia also publishes monthly NTA and investment updates, which report portfolio returns against its benchmark.

Any future dividend, and its franking and DRP terms, will be determined by the board and disclosed in a future dividend notice.

Risks and context

Past dividends are not a forecast. FGX's dividends rely on investment returns and its profits reserve, and weaker markets could reduce both. The August update showed 12-month portfolio returns of 2.9%, behind the index return of 3.5%, indicating that multi-manager portfolios do not always outperform.

LIC shares can trade at a discount or premium to NTA. Because the DRP issues new shares, it adds modestly to the share count. Reinvested dividends are still assessable income, and franking credits are included in taxable income, while each DRP parcel sets a new cost base for Capital Gains Tax purposes.

Conclusion

Future Generation Australia (ASX:FGX) has a DRP operating without a discount for its 3.8 cent fully franked interim dividend. The increased dividend and the reported profits reserve are part of the company's dividend profile, while market returns, the relationship between share price and NTA, and tax considerations remain relevant factors.

Key Insights

Future Generation Australia (ASX:FGX) has lifted its fully franked interim dividend to 3.8 cents per share and is operating its DRP without a discount, with the DRP price based on the VWAP over four trading days from the ex-dividend date and new shares issued to participants.

The company reported a profits reserve of 41.8 cents per share, equivalent to about 5.5 years of dividends at the annualised rate, and a portfolio return since inception ahead of its benchmark, although 12-month returns were behind the index in the August update.