WAM Leaders Limited has raised its fully franked full year dividend to 9.4 cents per share despite underperforming the ASX 200 in FY2025, signaling confidence in a market inflection and a strategic pivot towards quality and growth sectors.
- Investment portfolio rose 5.9% vs. ASX 200’s 13.8% in FY2025
- Fully franked full year dividend increased to 9.4 cents per share
- Operating profit before tax surged to $79 million from $20.2 million
- Portfolio positioned for growth amid market momentum unwinding
- Dividend reinvestment plan to operate without discount
Portfolio Performance and Market Context
WAM Leaders Limited (ASX – WLE) reported a 5.9% gain in its investment portfolio for the financial year ending June 30, 2025, falling short of the S&P/ASX 200 Accumulation Index’s 13.8% rise. The underperformance was attributed to a strategic underweight in momentum-driven stocks, including some major Australian banks, and the impact of the loss and sale of The Star Entertainment Group.
Lead Portfolio Manager Matthew Haupt noted that many of the factors that weighed on performance last year are now reversing, with July 2025 seeing the portfolio outperform the benchmark by 1.6 percentage points. This suggests the fund is well positioned to capitalize on a market inflection point, focusing on quality companies with resilient earnings and growth potential.
Dividend Increase and Financial Strength
Despite the portfolio lagging the benchmark, WAM Leaders declared an increased fully franked full year dividend of 9.4 cents per share, representing a 7.1% fully franked yield and a grossed-up yield of 10.1% including franking credits. The fully franked final dividend of 4.7 cents per share will be paid on November 17, 2025.
The company’s operating profit before tax soared to $79 million, up from $20.2 million the previous year, reflecting strong underlying earnings and effective capital management. The profits reserve stands at 24.7 cents per share, providing 2.6 years of dividend coverage, although the franking account balance may limit full franking of future dividends if tax on realised profits is insufficient.
Strategic Outlook and Sector Positioning
WAM Leaders is pivoting its investment approach to emphasize sectors with earnings resilience and growth, particularly in resources and financials. The resources sector is expected to benefit from China’s stimulus measures, while financial sector flows continue to show momentum. The portfolio remains diversified, with significant holdings in financials (24%), materials (17%), and healthcare (10%).
Chairman Geoff Wilson AO expressed confidence in the company’s proven investment process and its ability to deliver long-term shareholder returns despite recent challenges. The dividend reinvestment plan will continue without a discount, encouraging shareholders to compound their investment.
Looking Ahead
WAM Leaders will host a Q&A webinar on September 4, 2025, providing investors with further insights into portfolio positioning and outlook. As the market adjusts to shifting momentum trades, the company’s focus on quality and earnings resilience may prove prescient in navigating the evolving investment landscape.
Bottom Line?
WAM Leaders’ dividend hike amid portfolio headwinds signals confidence but raises questions on sustaining franking levels.
Questions in the middle?
- How will WAM Leaders manage potential partial unfranking of future dividends?
- Can the portfolio’s pivot to quality and growth sectors sustain outperformance over the ASX 200?
- What impact will China’s stimulus and financial sector momentum have on returns in FY2026?