WAM Income Maximiser’s Dividend Strategy Faces Test Amid Market Uncertainties

A Promising Start for WAM Income Maximiser

WAM Income Maximiser Limited, a newly listed Australian investment company, has released its preliminary final report for the period from its incorporation on 17 January 2025 through to 30 June 2025. The company successfully raised over $150 million in its initial public offering (IPO) in April 2025 and has since deployed capital into a diversified portfolio of high-quality ASX300 equities and investment grade corporate debt instruments.

In its first months of operation, WAM Income Maximiser recorded a net profit after tax of $1.16 million, reflecting the performance of its investment portfolio which increased by 6.4% since the IPO. The portfolio’s gross running yield stands at 4.7%, inclusive of franking credits, before factoring in capital growth. This performance underscores the company’s strategy to blend equity upside with the steady income streams offered by corporate debt.

Dividend Policy and Growth Outlook

Marking a significant milestone, the Board declared the inaugural fully franked monthly dividend of 0.20 cents per share for August 2025, payable on 29 August. This dividend is fully franked at a 30% tax rate, providing shareholders with valuable imputation credits. The company has also provided dividend guidance for the coming months, with a forecast of 0.25 cents per share for September and 0.30 cents per share for October, signaling a gradual increase aligned with the company’s objective to reach an annualised target income return of the Reserve Bank of Australia (RBA) Cash Rate plus 2.5% per annum, including franking credits.

The Board’s dividend policy emphasizes the payment of regular monthly franked dividends, contingent on the availability of sufficient profits reserves and franking credits, and adherence to prudent business practices. As of 31 July 2025, the profits reserve stood at 1.31 cents per share, with a capital profits reserve of 2.03 cents per share, providing a solid foundation for dividend sustainability and growth.

Investment Strategy and Portfolio Composition

WAM Income Maximiser’s investment approach is distinctive in its multi-asset framework, combining exposure to Australia’s highest quality companies with investment grade corporate debt. The equity portfolio focuses on profitable, cash flow generative companies within the ASX300 that offer sustainable or growing distributions through dividends and share buybacks. The debt portfolio prioritizes investment grade corporate notes, bonds, hybrids, and short-term money market instruments, selected through rigorous credit analysis to balance income generation with capital preservation.

At 30 June 2025, the portfolio comprised 66.3% equities, 22.9% corporate debt, and 9.6% hybrids, with cash and receivables making up the remainder. The portfolio’s sector diversification spans financials, materials, information technology, consumer staples, and real estate, among others. Notable holdings include Commonwealth Bank corporate debt, Rio Tinto Limited shares, and hybrid securities from major Australian banks.

Governance, Fees, and Future Capital Management

Governance is overseen by a Board comprising experienced directors including Chairman Geoff Wilson AO, who also founded Wilson Asset Management. The company’s investment management is conducted by Wilson Asset Management (International) Pty Limited, which receives a management fee of 0.88% per annum plus GST and is eligible for a performance fee subject to portfolio outperformance against a benchmark blend of the S&P/ASX 300 Accumulation Index and Bloomberg AusBond Bank Bill Index plus 1.0% per annum. No performance fee was payable for the initial period, with an underperformance balance carried forward.

Looking ahead, the Board has scheduled an Extraordinary General Meeting on 25 August 2025 to seek shareholder approval to increase the Company’s placement capacity under ASX Listing Rule 7.1. This move aims to provide greater financial flexibility to capitalize on future investment opportunities and support the company’s growth strategy.

Outlook and Market Positioning

The investment team anticipates a modest decline in interest rates by the end of 2025, supported by a resilient Australian economy. This outlook informs portfolio positioning to capture further capital growth while maintaining income generation. The company’s early trading at a premium to net tangible assets (NTA) reflects strong market demand and confidence in its strategy.

WAM Income Maximiser’s commitment to delivering monthly franked dividends alongside capital growth positions it as an attractive option for investors seeking income with exposure to quality Australian equities and corporate debt. The company’s transparent communication and robust governance framework further enhance its appeal in the competitive listed investment company landscape.