Highlights

  • Pepper Money offers a 12.8% annual dividend yield alongside a 38.19% one-year share price return.
  • The company reported a combined annualised dividend yield of 20.9% in 1H 2025, including a 13.9% special dividend yield.
  • Pepper Money’s strategic acquisition of RAMS portfolio worth AUD 21.4 billion aims to boost its capital-light servicing business.

 

Pepper Money Ltd (ASX:PPM) shares have attracted investor’s attention with a notable annual dividend yield of 12.8%, accompanied by a 38.19% one-year return. This reflects the company's capacity to provide substantial income returns to investors in addition to capital appreciation.

In its half-year FY2025 financial report, Pepper Money reported a combined annualised dividend yield of 20.9%, which includes a special dividend of 12.5 cents per share (cps) and an interim dividend of 6.4 cps. The special dividend alone translates to an annualised yield of 13.9%, underscoring the company’s commitment to returning value to shareholders. The interim dividend adds a 7.1% yield, supported by a 60% payout ratio for the half-year period.

Financial Performance Fuels Attractive Dividend Payouts

The company’s ability to provide high dividends to investors is supported by its favourable financial performance. For the period 1H 2025, Pepper Money's net profit after tax (NPAT) stood at AUD 47.0 million, representing a 2% increase compared to the prior corresponding period (PCP).

The profit before tax and loan loss expense was AUD 109.2 million, marking a 1% growth versus PCP. These figures are complemented by a total expense control, with operating costs amounting to AUD 116.7 million, reflecting a 2% improvement on PCP and an 8% gain in the second half of 2024.

The company continued to expand its originations volume, reaching AUD 4.5 billion in 1H 2025—a 38% increase on PCP—with mortgage originations rising 53% to AUD 2.8 billion and asset finance growing 19% to AUD 1.7 billion. Total assets under management (AUM) were reported at AUD 20.1 billion, with mortgages at AUD 9.5 billion and asset finance at AUD 6.3 billion.

Pepper Money also recorded an expanded total net interest margin (NIM) of 1.98%, up 6 basis points on PCP, driven primarily by asset finance NIM growth to 2.73% (up 21 basis points), despite a 9 basis points decline in mortgages.

Strategic Expansion: RAMS Home Loan Portfolio Acquisition

On 3 November 2025, Pepper Money announced the signing of a binding agreement to acquire the RAMS home loan portfolio from Westpac Banking Corporation. This portfolio includes approximately AUD 21.4 billion in residential mortgages as of 30 September 2025. The acquisition is expected to close in the third quarter of 2026, subject to regulatory approvals including the Foreign Investment Review Board and the Australian Competition and Consumer Commission.

The transaction supports Pepper Money's strategy to grow its capital-light servicing business, which provides annuity-style earnings and diversification benefits. Pepper Money will service the portfolio and hold a minor investment in the securitisation financing vehicle alongside consortium members including KKR.