Sims Limited (ASX:SGM) shareholders will not be able to reinvest their next Dividend through a dividend reinvestment plan (DRP). The board has determined that the DRP will not operate for the fully franked FY26 final dividend of 20 cents per share.

Sims shares finished at $24.51, compared with $13.34 a year earlier. Dividends with ex-dates in the relevant 12-month period give a trailing Yield of about 1.10%, while the grossed-up yield is about 1.57%. Both measures are historical rather than forecasts.

Latest developments

Sims reported its FY26 results, with sales Revenue rising 6.9% to $8,007.5 million, while underlying Earnings before interest and tax (EBIT) climbed 167.6% to $468.0 million. Statutory net profit after tax (NPAT) was $245.3 million, compared with $2.4 million in FY25, while underlying NPAT rose 247.9% to $289.1 million.

The largest improvement came from Sims Lifecycle Services (SLS), which reported underlying EBIT of $172.7 million, compared with $32.6 million in FY25. SLS revenue increased 77.4% to $757.0 million, supported by higher resale revenue, DDR4 memory pricing and increased volumes of processed repurposed units. Management has provided first-half FY27 underlying EBIT guidance of $75 million to $90 million.

Return on invested Capital improved to 11.7% in FY26. The company said the result reflected stronger metal trading margins, non-ferrous market conditions, SLS growth and improvements across its North American businesses. Sims has also outlined plans to expand its data-centre lifecycle activities into newer memory technologies and GPUs.

Key numbers

Sims closed at $24.51, compared with $13.34 a year earlier. Its two dividends with ex-dates in the relevant 12-month period, the 13 cent FY25 final and the 14 cent FY26 interim, total 27 cents per share. Both were fully franked, giving a trailing Dividend Yield of about 1.10%.

The grossed-up yield of about 1.57% assumes a 30% company tax rate, and its value depends on each investor's tax position. The 20 cent final dividend is fully franked and takes total FY26 dividends to 34 cents per share, up 47.8% from FY25.

About the company

Sims is a global metal recycling and technology lifecycle Business headquartered in Australia. Its metal operations buy, process and sell ferrous and non-ferrous recycled metals, while the company also holds a 50% interest in SA Recycling in the United States. Sims Lifecycle Services provides technology infrastructure lifecycle services, including the recovery, reuse and recycling of data-centre and other technology equipment.

Stephen Mikkelsen is Group Chief Executive Officer and Managing Director. Net tangible assets were $12.03 per share at the end of FY26.

How the DRP works

Sims has a DRP framework, but the board determines whether it operates for each dividend. For the FY26 final dividend, the Appendix 4E states that the plan will not operate. Shareholders will therefore receive the 20 cent final dividend in cash rather than additional Sims shares.

When a DRP does operate, participating shareholders receive new or existing shares instead of cash, with the applicable pricing methodology and any discount determined under the relevant dividend announcement and DRP terms. Investors who want to reinvest Sims dividends while the DRP is inactive would need to make that decision separately and purchase shares on market.

Future dividend notices will determine whether the DRP is reinstated and the terms that would apply.

Why it matters for income investors

The Sims story has included a significant increase in the share price alongside higher earnings and dividends. At about 1.10%, the trailing yield remains relatively modest because the share price has increased more rapidly than the dividend.

Still, dividends are growing. FY26 payouts of 34 cents per share compare with 23 cents in FY25, and the FY26 final dividend is fully franked. The company has also indicated that a greater proportion of future earnings is expected to come from its non-Australian operations, which could reduce the availability of franking credits on future dividends.

Suspending the DRP means Sims will not issue additional shares under the plan for this dividend. For shareholders who previously relied on automatic reinvestment, the practical change is that the final dividend will be received as cash, leaving any subsequent reinvestment decision separate from the dividend payment.

What comes next

Investors will watch whether SLS delivers its first-half FY27 underlying EBIT guidance of $75 million to $90 million and how conditions develop across memory, data-centre lifecycle services and the broader metals businesses.

Sims has also identified DDR5 and GPU repurposing as areas for future SLS development. The company expects DDR4 repurposing opportunities to continue as the market develops, while DDR5 and GPU-related activities represent additional areas under evaluation.

Any decision to reactivate the DRP, and the terms of any future plan, will be determined by the board and disclosed with the relevant dividend announcement.

Risks and context

A trailing yield is not a forecast, and Sims' earnings remain exposed to movements in metal markets and conditions affecting technology lifecycle services. While FY26 statutory Operating Cash Flow increased to $423.6 million from $297.1 million, net Debt increased to $358.3 million from $332.3 million in the prior financial year.

SLS earnings also depend on the timing and mix of data-centre decommissioning activity and memory-market conditions. Management has noted that the timing of decommissioning activities remains variable, while first-half FY27 SLS guidance is below the FY26 full-year underlying EBIT result. In ANZ, ferrous market conditions remain affected by Chinese steel exports, while metal operations are exposed to Commodity prices and broader market conditions.

The DRP also has trade-offs. While the plan is inactive for the FY26 final dividend, shareholders receiving cash can separately decide whether to reinvest it. Any future DRP participation would involve receiving shares rather than cash, with the resulting shares carrying their own tax cost base.

Conclusion

Sims (ASX:SGM) has reported higher FY26 earnings and a 47.8% increase in total dividends to 34 cents per share, but its DRP will not operate for the 20 cent fully franked final dividend. Shareholders will therefore receive the final payment in cash, while SLS performance, metals markets, balance-sheet movements and future dividend decisions remain relevant to the company's shareholder-return framework.