WAM Capital Outperforms ASX Indices by 8%, Declares 7.75c Dividend

Strong Portfolio Performance Amid Market Challenges

WAM Capital Limited (ASX: WAM) has once again demonstrated its investment acumen, delivering a 14.9% increase in its portfolio value over the six months ending 31 December 2024. This performance notably outpaced the S&P/ASX All Ordinaries Accumulation Index by 8.0% and the S&P/ASX Small Ordinaries Accumulation Index by 9.4%, underscoring the fund’s ability to navigate a challenging market environment.

The calendar year 2024 was particularly strong, with the portfolio appreciating 30.2%, outperforming the All Ordinaries by 18.8% and the Small Ordinaries by 21.8%. This sustained outperformance has been a key driver behind a 40.3% increase in operating profit before tax, which reached $208.7 million, and a 40.6% rise in after-tax operating profit to $149.8 million.

Dividend Stability and Profits Reserve Strength

Reflecting confidence in ongoing performance, the WAM Capital Board declared an interim dividend of 7.75 cents per share, partially franked at 60%, payable on 30 April 2025. This dividend equates to an annualised yield of 9.6%, or 12.1% when grossed-up for franking credits, maintaining a generous payout for shareholders.

Importantly, the company’s profits reserve stands at 24.9 cents per share prior to this dividend payment, the highest level since September 2021. This reserve provides a solid buffer for future dividends, signaling financial resilience and a commitment to shareholder returns.

Portfolio Composition and Strategic Positioning

WAM Capital’s portfolio remains diversified across sectors, with significant allocations to financials (16.6%), consumer discretionary (15.5%), and industrials (14.5%). The investment team, led by Oscar Oberg, highlighted the portfolio’s positioning to capitalize on opportunities in 2025, particularly benefiting from a favourable interest rate environment despite ongoing small-cap sector headwinds.

The portfolio’s top holdings include Tuas Limited, G8 Education, and Judo Capital Holdings, reflecting a research-driven approach that balances growth potential with risk management. Cash holdings remain at 10.8%, providing flexibility to seize new investments as market conditions evolve.

Market Reception and Outlook

WAM Capital’s share price discount to net tangible assets (NTA) narrowed significantly during the half-year, from 4.6% at 30 June 2024 to just 1.4% at 31 December 2024. This tightening discount, combined with strong total shareholder returns of 15.2% (16.6% including franking credits), reflects growing investor confidence in the company’s strategy and execution.

Chairman Geoff Wilson AO emphasized the team’s consistent outperformance and the Board’s commitment to maintaining a high dividend payout. Looking ahead, the company’s ability to sustain portfolio growth of approximately 15% per annum will be critical to uphold its dividend policy amid evolving market dynamics.