How WAM Strategic Value Sustained Dividends Despite Profit Halving in FY2025
WAM Strategic Value reported a near 50% drop in net profit for FY2025 but maintained its fully franked dividend, supported by an 8.6% portfolio gain that outperformed market downturns.
- Net profit after tax down 48% to $11.5 million
- Investment portfolio rose 8.6% despite market volatility
- Fully franked full year dividend steady at 6.0 cents per share
- Share price discount to net tangible assets narrows slightly to 14.6%
- Key holdings include WAM Global, Pengana International Equities, and Australian Unity Office Fund
Financial Results in Context
WAM Strategic Value Limited has released its audited results for the year ended 30 June 2025, revealing a significant decline in net profit after tax to $11.5 million, down 48% from the prior year. This drop largely reflects unrealised fair value losses amid a challenging market environment, rather than operational underperformance. Revenue from ordinary activities also halved, falling 51.7% to $18.5 million.
Despite these headwinds, the company’s investment portfolio delivered a robust 8.6% gain over the financial year, outperforming the S&P/ASX All Ordinaries Accumulation Index during periods of market weakness. This defensive characteristic was underpinned by a disciplined focus on listed investment companies (LICs) and trusts (LITs) trading at discounts to their underlying net asset values.
Dividend Continuity and Capital Management
In a signal of confidence, the Board declared a fully franked final dividend of 3.0 cents per share, maintaining a full year dividend of 6.0 cents per share. This equates to a fully franked dividend yield of 5.6%, or 8.0% when grossed up for franking credits, underscoring the company’s commitment to delivering income alongside capital growth.
The company’s net tangible asset (NTA) backing per share slightly declined to $1.26 before tax, with the share price trading at a 14.6% discount to NTA, a modest improvement from 14.9% a year earlier. The theoretical look-through pre-tax NTA, which factors in the estimated value of underlying investments, stood at $1.50, highlighting a substantial discount that the Board views as a compelling opportunity for investors.
Portfolio Positioning and Key Holdings
WAM Strategic Value’s portfolio remains diversified, with a significant allocation to global and domestic LICs and LITs. Notable contributors to portfolio performance included WAM Global Limited, Pengana International Equities, and the Australian Unity Office Fund. The company also maintained a sizeable cash position of approximately 19.5%, reflecting a cautious stance amid geopolitical tensions and market volatility.
Activist investor activity at Pengana International Equities, including a substantial holding increase by Saba Capital, has prompted WAM Strategic Value to increase its stake, anticipating potential capital management initiatives to narrow the persistent share price discount to NTA.
Governance, Advocacy, and Outlook
The company’s governance remains robust, with an experienced Board led by Chairman Geoff Wilson AO. WAM Strategic Value continues to advocate on regulatory issues impacting retail investors, including opposition to proposed superannuation tax reforms and support for fairer investor access to capital markets.
Looking ahead, the company emphasizes capital preservation, dividend sustainability, and active management of the share price discount to NTA. While market uncertainties persist, WAM Strategic Value’s disciplined investment approach and strong cash position provide flexibility to capitalize on discounted asset opportunities as they arise.
Bottom Line?
WAM Strategic Value’s steady dividends and portfolio resilience amid profit pressures set the stage for a watchful market response.
Questions in the middle?
- Will activist investor involvement at Pengana International Equities trigger significant capital management changes?
- How will WAM Strategic Value deploy its substantial cash reserves in the coming year?
- What impact will ongoing regulatory advocacy have on the company’s investment strategy and shareholder returns?
