WAM Leaders Posts 132% Profit Surge, Boosts Interim Dividend to 4.7 Cents
WAM Leaders Limited reported a striking 131.9% increase in net profit for the half-year ending December 2024, alongside a raised fully franked interim dividend, underscoring its commitment to shareholder returns despite portfolio underperformance against the ASX 200.
- Net profit after tax surged 131.9% to $38.86 million
- Interim dividend increased 111% to 4.7 cents per share, fully franked
- Investment portfolio grew 3.3%, trailing the S&P/ASX 200 Accumulation Index's 6.9% rise
- Net tangible asset backing per share slightly declined to $1.31
- Successful acquisition of QV Equities expanded capital base and liquidity
Robust Profit Growth Amid Market Nuances
WAM Leaders Limited has unveiled a remarkable financial performance for the half year ended 31 December 2024, with net profit after tax soaring to $38.86 million, a 131.9% increase compared to the prior corresponding period. This surge reflects both realised and unrealised gains within its investment portfolio, signaling strong operational execution despite a complex market backdrop.
The company’s revenue from ordinary activities reached nearly $64 million, with profit before tax climbing 184.7% to $48 million. These figures underscore the effectiveness of WAM Leaders’ disciplined investment approach, which balances capital growth with a steady stream of fully franked dividends.
Dividend Policy Reinforces Shareholder Value
In line with its commitment to returning value, WAM Leaders declared a fully franked interim dividend of 4.7 cents per share, marking an impressive 111% increase from the previous interim dividend. This dividend will be paid on 29 April 2025, with a Dividend Reinvestment Plan (DRP) available at no discount, allowing shareholders to compound their holdings.
Since inception in 2016, the company has distributed 53.35 cents per share in fully franked dividends, highlighting a consistent focus on income generation alongside capital preservation.
Investment Portfolio Performance and Market Positioning
WAM Leaders’ investment portfolio grew by 3.3% over the six months, a respectable gain though it lagged the S&P/ASX 200 Accumulation Index’s 6.9% rise. The underperformance is attributed primarily to a strategic underweight position in the banking sector, reflecting the investment team’s cautious stance on elevated valuations and preference for risk-adjusted returns.
The portfolio maintained an average cash weighting of 2.4%, underscoring a conservative approach aimed at capital preservation. Since inception, the portfolio has delivered an annualised return of 12.2%, outperforming the benchmark index by 3.0% per annum, a testament to the long-term efficacy of its investment philosophy.
Net Tangible Assets and Capital Management
Net tangible asset (NTA) backing per share before tax slightly decreased to $1.31 from $1.38 a year earlier, reflecting dividend payments and market movements. The company’s NTA after tax stood at $1.32 per share. Management fees, expenses, and capital management activities contributed to the difference between portfolio performance and NTA growth.
A significant capital management milestone was the acquisition of QV Equities Limited, completed via a Scheme of Arrangement in July 2024. This transaction added approximately $135.6 million in new shares, expanding WAM Leaders’ capital base and enhancing liquidity. The enlarged scale is expected to improve broker coverage, attract financial planner interest, and reduce fixed expense ratios, benefiting shareholders.
Governance and Outlook
The company’s board saw the appointment of Melinda Snowden as an independent director at the end of 2024, reinforcing governance strength. The independent auditor, Pitcher Partners Sydney, provided an unqualified review report, affirming the integrity of the financial statements.
Looking ahead, WAM Leaders remains focused on delivering fully franked dividends, preserving capital, and pursuing investment opportunities that offer attractive risk-adjusted returns. The cautious stance on sectors with elevated valuations suggests a measured approach to navigating ongoing market volatility.
Bottom Line?
WAM Leaders’ strong profit growth and dividend lift highlight resilience, but cautious sector positioning signals careful navigation ahead.
Questions in the middle?
- How will WAM Leaders adjust its sector allocations if banking valuations stabilize or improve?
- What impact will the QV Equities acquisition have on long-term portfolio diversification and returns?
- Can the company sustain its dividend growth amid potential market headwinds and fee pressures?