WAM Microcap Limited has outperformed the ASX Small Ordinaries Index for the eighth consecutive year, posting an 18.8% portfolio gain and raising its fully franked dividend to 10.6 cents per share.
- Investment portfolio up 18.8% in FY2025, outperforming ASX Small Ordinaries by 6.5%
- Fully franked full year dividend increased to 10.6 cents per share
- Since 2017 inception, average annual portfolio return of 16.3% and 100.1 cents per share in dividends
- Key contributors include Service Stream and GenusPlus Group
- Outlook supported by expected declining interest rates and increased capital markets activity
Consistent Outperformance
WAM Microcap Limited (ASX – WMI) has once again demonstrated its investment prowess, delivering an 18.8% increase in its portfolio value for the 12 months ending 30 June 2025. This marks the eighth consecutive year the fund has outperformed the S&P/ASX Small Ordinaries Accumulation Index, which rose 12.3% over the same period. The fund’s annualized return since its 2017 inception stands at a robust 16.3%, comfortably beating the benchmark by 9.5% per annum.
Dividend Growth Reflects Strong Earnings
Reflecting this strong performance, the Board has increased the fully franked full year dividend to 10.6 cents per share, representing a 6.6% dividend yield and a grossed-up yield of 9.4% when factoring in franking credits. The final dividend of 5.3 cents per share is fully franked and payable on 29 October 2025. Since listing at $1.10 per share in 2017, WAM Microcap has returned shareholders 100.1 cents per share in fully franked dividends, underscoring its commitment to delivering steady income alongside capital growth.
Portfolio Highlights and Strategy
Lead Portfolio Manager Oscar Oberg highlighted key contributors to the fund’s outperformance, notably Service Stream and GenusPlus Group. The portfolio remains diversified across sectors, with significant weightings in financials, industrials, consumer discretionary, and information technology. The fund also actively participated in several takeovers during the year, including The Reject Shop and Smartpay Holdings, capitalizing on market opportunities consistent with its proven investment process.
Looking Ahead
Chairman Geoff Wilson AO expressed confidence in the fund’s outlook, noting that anticipated declines in interest rates throughout the 2026 financial year should bolster capital markets activity and investor confidence. This environment is expected to benefit microcap equities, potentially driving further portfolio gains and supporting dividend sustainability.
Investor Engagement
WAM Microcap will host a Q&A webinar on 10 September 2025, providing investors with an opportunity to engage directly with the investment team and gain deeper insights into the fund’s performance and strategy. The Dividend Reinvestment Plan remains in operation, allowing shareholders to reinvest dividends without a discount, further aligning interests between the fund and its investors.
Bottom Line?
WAM Microcap’s sustained outperformance and dividend growth position it well to capitalize on a more favourable market environment in FY2026.
Questions in the middle?
- How will ongoing macroeconomic shifts impact the microcap sector’s performance?
- What are the fund’s plans for portfolio adjustments amid evolving market conditions?
- Can WAM Microcap maintain its dividend growth trajectory if interest rates fluctuate unexpectedly?