WAM Capital’s Strong Returns Could Face Headwinds From Market Volatility
WAM Capital Limited outperformed key ASX indices with a 22.2% portfolio increase in FY2025, declaring a strong 15.5 cents per share dividend that yields 9.1%.
- Investment portfolio rose 22.2%, beating ASX All Ordinaries by 9%
- Final dividend declared at 7.75 cents per share, 60% franked
- Full year dividend totals 15.5 cents per share with 9.1% yield
- Total shareholder return including franking credits reached 22.5%
- Portfolio focused on undervalued small-to-medium growth companies
Strong Portfolio Performance
WAM Capital Limited (ASX, WAM) has reported a robust 22.2% increase in its investment portfolio for the financial year ending June 2025. This performance notably outpaced the S&P/ASX All Ordinaries Accumulation Index by 9.0% and the Small Ordinaries Accumulation Index by 9.9%, underscoring the effectiveness of its disciplined, high-conviction stock selection strategy.
Chairman Geoff Wilson AO highlighted the consistent outperformance delivered by the investment team, attributing success to a proven process focused on identifying undervalued growth companies across various sectors. This approach has allowed WAM Capital to maintain its competitive edge in the small-to-medium company space.
Dividend and Shareholder Returns
The Board declared a final dividend of 7.75 cents per share, partially franked at 60%, bringing the full year dividend to 15.5 cents per share. This translates to a high dividend yield of 9.1%, or 11.4% when factoring in franking credits, providing shareholders with a compelling income stream. Total shareholder return, including the value of franking credits, was an impressive 22.5% for the year.
Since its inception in 1999, WAM Capital has returned over $2.0 billion to shareholders in dividends and franking credits, reflecting a long-term commitment to delivering both income and capital growth.
Portfolio Composition and Outlook
Lead Portfolio Manager Oscar Oberg noted that despite market volatility in the latter half of the year, the portfolio capitalized on themes benefiting small-cap stocks. The diversified portfolio spans sectors such as consumer discretionary, industrials, financials, and information technology, with a 7.3% cash holding providing flexibility.
Oberg expressed optimism about the prospects for undervalued small-cap growth companies, suggesting that historical interest rate cycles could catalyze renewed investor interest and outperformance in this segment. Core holdings remain intact, signaling confidence in their future potential.
Looking Ahead
WAM Capital’s upcoming dividend dates are set for October 2025, with a Dividend Reinvestment Plan (DRP) available to shareholders without a discount. The company also plans a Q&A webinar in September to provide further insights into its FY2025 results and outlook.
Overall, WAM Capital’s strong performance and attractive dividend yield reinforce its position as a leading LIC focused on small-to-medium Australian companies, managed by Wilson Asset Management with a track record spanning over 27 years.
Bottom Line?
WAM Capital’s sustained outperformance and dividend strength set the stage for continued investor interest amid evolving market conditions.
Questions in the middle?
- How will future tax and dividend franking levels impact WAM Capital’s dividend policy?
- What specific small-cap sectors or themes does the investment team see as most promising going forward?
- How might ongoing market volatility affect WAM Capital’s portfolio positioning and risk management?
