WAM Active Posts 34.9% Profit Rise, 3.0c Fully Franked Dividend Declared

Strong Portfolio Performance Defies Market Norms

WAM Active Limited (ASX: WAA) has reported an impressive 32.5% increase in its investment portfolio for the 2024 calendar year, a performance that notably outpaced the S&P/ASX All Ordinaries Accumulation Index by 21.1% and the Bloomberg AusBond Bank Bill Index by 28.0%. This robust growth underscores the effectiveness of WAM Active's active trading strategy and flexible cash mandate in navigating volatile market conditions.

For the six months ending 31 December 2024, the portfolio rose 17.5%, outperforming the ASX All Ordinaries by 10.6% and cash benchmarks by 15.2%. This consistent outperformance has been a key driver behind the company’s financial results.

Financial Results Reflect Operational Strength

The strong portfolio returns translated into a 34.9% increase in operating profit before tax, reaching $7.6 million for the half-year period ending January 2025, compared to $5.6 million in the prior corresponding period. Operating profit after tax also rose by 33.2% to $5.4 million. These figures highlight the company’s ability to convert investment gains into tangible earnings growth.

WAM Active’s pre-tax net tangible assets (NTA) stood at $0.86 per share as of 31 January 2025, reflecting solid capital preservation alongside growth. The company’s profits reserve was healthy at 17.7 cents per share before the payment of the 3.0 cents per share fully franked interim dividend.

Dividend Policy Balances Income and Growth

The Board declared a fully franked interim dividend of 3.0 cents per share, maintaining the dividend level from previous periods. This represents an annualised fully franked dividend yield of 6.8%, or 9.7% when grossed up for franking credits. Since inception, WAM Active has paid a total of 98.7 cents per share in fully franked dividends, which rises to 141.0 cents per share including franking credits, demonstrating a strong commitment to delivering income alongside capital growth.

Chairman Geoff Wilson AO praised the investment team’s performance, noting the portfolio’s outperformance by over 20% relative to the market in 2024. Lead Portfolio Manager Oscar Oberg emphasized the team’s nimble approach, leveraging corporate actions such as takeovers, restructures, and capital raisings to generate alpha.

Outlook: Opportunities Amid Anticipated Rate Cuts

Looking ahead, WAM Active is positioning itself to capitalise on expected increased capital markets activity following anticipated interest rate cuts by mid-2025. Mr Oberg highlighted that such an environment typically fosters corporate acquisitions, capital management initiatives, and initial public offerings, all fertile ground for the company’s active investment strategy.

The company’s dividend coverage remains robust with 3.0 years of coverage based on current profit reserves, providing a buffer for sustained income distribution even in fluctuating market conditions.

WAM Active’s diversified portfolio spans financials, industrials, information technology, and consumer discretionary sectors, among others, reflecting a balanced approach to risk and opportunity.