Rivco delivers record 80% lease coverage as it resets earnings base
In its August 2026 half-year results presentation, Rivco Australia (ASX:RIV) outlined a half-year defined by record lease coverage across its water portfolio and a deliberate pivot toward a more predictable, recurring-income earnings base.
Management highlighted that 80% of the portfolio was leased from 1 July 2026, up from 54% at 31 December 2025, reaching the upper end of the 70–80% target set at the April 2026 AGM.
The Company reported Net Profit Before Tax of $3.0 million (1H2025: $35.3m). The 91% decline reflects the absence of entitlement sale gains, which contributed $34.3m in the prior period.
Rivco delivered a pre-tax NAV total return of 3.6%, with pre-tax NAV of $1.76 per share. The result marks a transition away from lumpy, capital-gains-driven earnings toward stable, lease-backed income.
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Half-year 2026 results at a glance
The presentation set out the headline metrics for the six months to 30 June 2026 against the prior corresponding period.
| Metric | 1H2026 | 1H2025 | Commentary |
|---|---|---|---|
| Net Profit Before Tax | $3.0m | $35.3m | Prior period included $34.3m entitlement sale gains |
| EPS | 1.3c | 15.8c | Prior period boosted by capital gain event |
| Pre-tax NAV per share | $1.76 | $1.75 (FY25) | +1c |
| Portfolio leased (from 1 Jul 2026) | 80% | 54% (Dec-25) | Record coverage |
| Loan to Valuation Ratio | 12% | 7% (FY25) | Well within 40% covenant |
Why record lease coverage matters
Rivco owns permanent water entitlements, holding 61.3 GL across 18 entitlement types valued at $309m. It generates income by leasing water to irrigators across sectors including almonds, grapes, citrus, cotton and more.
Leasing provides recurring, contracted cash flow. This contrasts with one-off entitlement sales, which are lumpy and unpredictable by nature.
The strategic significance is clear in the forward book. Committed lease revenue of $10.6m for the 2026/27 water year (or $11.4m including forwards) represents 85% of the portfolio by value, with a weighted average lease expiry (WALE) of 3.4 years. The target was met through several new agreements, including a five-year lease with Australia’s largest almond producer.
The target was met through several new agreements, with the five-year lease with Select Harvests subsidiary Kyndalyn Park Pty Ltd contributing approximately $11.7 million in contracted revenue and lifting leased portfolio coverage to around 82% by value from 1 July 2026.
Key lease and forward metrics from 1 July 2026 include:
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Committed revenue: $11.4m (leases $10.6m plus forwards $0.8m)
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Committed volume: 41,917 ML
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Effective yield: 4.3%
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High security proportion: 95%
According to management, the higher lease coverage places a floor under earnings and reduces volatility, structurally de-risking the income profile.
A deliberate dividend reset from a position of strength
The Company paid a fully franked final 2025 dividend of 3.72 cps in April 2026, its 18th consecutive dividend and bringing total dividends to 56.2 cps since inception.
The October 2026 dividend of 1.8 cps fully franked steps down from 3.72 cps. Management described this as a deliberate reset, noting that the decision is made from a position of strength, citing 80% lease coverage, completed internalisation and gearing of just 12%.
An evolved dividend framework takes effect from 1 January 2027, comprising two components. A Core Component (60–100% of Adjusted NPAT) is underpinned by core operational earnings, alongside a Discretionary Component (0–100% of after-tax realised gains) assessed against market conditions and which should not be relied upon each year.
Dividends historically supported “in part by realised capital gains” will instead be “underpinned by core operational earnings, comprising recurring lease income, forward sales and spot allocation sales.” Payments are expected semi-annually in April and October, providing shareholders with “at least six months visibility.”
October 2026 dividend key dates:
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Ex-Dividend Date: Thursday, 15 October 2026
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Record Date: Friday, 16 October 2026
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Last Day for DRP Elections: Monday, 19 October 2026
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Payment Date: Friday, 30 October 2026
Capital management and portfolio growth
The Company drew $15.5m of debt during the half to acquire attractively valued entitlements, bringing total debt to $38.0m. This lifted the Loan to Valuation Ratio to 12% (FY25: 7%), remaining well within the maximum 40% covenant.
The Rivco FY25 annual results, reported in March 2026, showed net profit before tax of $33.5 million driven by $38.7 million in realised capital gains, a result that also saw gearing fall from 31% to 7% after $93.5 million in debt repayment, setting the balance sheet base from which the current period’s acquisitions were funded.
The effective cost of borrowings was 5.7%, down slightly from 5.8% in FY2025.
The on-market share buy-back was recommenced in May 2026. During the half, the Company bought back 1.1 million shares at an average price of $1.42 per share.
The water portfolio grew to $309m (from $286m at 31 December 2025), reflecting acquisitions completed during the period together with valuation uplift supported by continued Government buybacks. The portfolio also carries $67.6m ($0.43 per share) of unrealised gains excluded from the statutory accounts.
The long-term thesis: a structural supply-demand imbalance
Management outlined a long-term investment case built on a growing structural imbalance in the southern Murray-Darling Basin. WSP, the Company’s independent valuer, projects permanent horticulture demand in the Lower Murray of approximately 1,494 GL per annum at full maturity, while Government buybacks permanently remove supply from the consumptive pool.
Approximately 380 GL of the 450 GL target had been recovered or contracted as reported in June 2026. In four of five modelled scenarios, estimated supply falls below projected permanent demand. Under a repeat of 2007-08 conditions, supply would cover less than one third of projected demand.
Water entitlements have delivered a ~6% p.a. CAGR since 2008, reinforcing water’s role as a defensive, largely uncorrelated real asset. On the supply side, Southern Basin storages recovered to 61% at 21 August 2026 after winter rainfall, broadly in line with the 65% long-term average.
Investment Thesis Update
“These dynamics are expected to support the long-term value of entitlements in the southern Basin.”
The full updated investment thesis is expected to be released in September 2026.
What’s next for Rivco
The presentation set out the forward calendar for shareholders:
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September 2026 — Updated investment thesis and strategic framework released.
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30 October 2026 — Fully franked 1.8 cps dividend paid; DRP continues.
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1 January 2027 — Evolved dividend framework takes effect.
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February 2027 — Full-year 2026 results and 2027 dividend guidance.
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April/May 2027 — Annual General Meeting.
On leadership, Brendan Rinaldi was appointed Executive Chairman for 12 months (effective 22 June 2026), while Dr Vivienne Brand was appointed Lead Independent Director and Deputy Chair.
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