In a world where high-yield investments are often accompanied by high risk, Hearts and Minds Investments Ltd (ASX: HM1) stands out as a unique player on the Australian Securities Exchange (ASX). With a grossed-up dividend yield exceeding 9.9%, including franking credits, this listed investment company (LIC) offers both financial and philanthropic rewards.
Hearts and Minds Investments is not your typical LIC. Unlike many of its peers, it operates without management fees. Instead, it donates 1.5% of its net assets annually to support Australian medical research, benefiting institutions like the Bionics Institute and the Victor Chang Cardiac Research Institute. This dual focus on returns and charitable contributions makes it a compelling choice for investors.
Investment Strategy and Performance
The company’s investment strategy is built around a high-conviction portfolio, primarily composed of global shares. These are selected by a group of fund managers who contribute their best ideas without charge. The portfolio, typically consisting of 25 to 35 names, is refreshed annually at an investment conference, ensuring a diversified and dynamic mix.
Over the past three years, ending January 31, 2026, Hearts and Minds’ portfolio has delivered an average return of 12.4%. While not the highest in the market, this performance, combined with its unique structure, makes it a worthy consideration for long-term investors.
Dividend Yield and Financial Health
Hearts and Minds is committed to delivering sustainable and growing dividends to its shareholders. The company plans to increase its fully franked dividend by 0.5 cents per share every six months, aiming for a total dividend of 19.5 cents per share for FY26, barring any prolonged market downturns.
“At the time of writing, the ASX dividend share could provide a grossed-up dividend yield of almost 9.9% including franking credits and 6.9% excluding franking credits.”
The company recently reported a pre-tax net tangible assets (NTA) per share of $3.42 as of February 13, 2026, indicating a market valuation at a discount of more than 17%. This presents a potentially lucrative opportunity for income-focused investors.
Philanthropy Meets Investment
Hearts and Minds Investments’ approach to philanthropy is as innovative as its investment strategy. By channeling a portion of its assets to medical research, it aligns financial growth with societal benefit. This model not only enhances its appeal to socially conscious investors but also sets a precedent for other LICs.
According to industry experts, this blend of high yield and philanthropy could become increasingly attractive as investors seek to align their portfolios with personal values and societal impact.
Looking Ahead
As the investment landscape evolves, Hearts and Minds Investments is well-positioned to continue its dual mission of delivering robust financial returns and supporting vital medical research. Its commitment to increasing dividends and maintaining a diversified portfolio suggests a promising future.
For investors seeking a balance of income, growth, and social impact, Hearts and Minds Investments offers a unique proposition. With its current market valuation and strategic focus, it remains a significant component of any income-focused portfolio.
