WAM Research’s Dividend Franking Faces Uncertainty Amid Tax and Market Risks

Strong Portfolio Performance Amid Market Volatility

WAM Research Limited (ASX – WAX) has announced a standout performance for the financial year ended 30 June 2025, with its investment portfolio appreciating by 22.4%. This result significantly outpaced the S&P/ASX All Ordinaries Accumulation Index by 9.2%, underscoring the effectiveness of its research-driven investment approach focused on undervalued growth companies.

Despite a challenging market environment marked by geopolitical tensions and economic uncertainty, WAM Research’s portfolio demonstrated resilience. The company’s strategy of investing predominantly in small-to-medium industrial companies listed on the ASX has delivered consistent outperformance, with a 15.2% annualised return since the 2010 strategy revision.

Dividend Stability and Income Appeal

The Board declared a full year dividend of 10.0 cents per share, partially franked at 60%, maintaining the dividend yield at a compelling 9.0%. Including franking credits, the grossed-up dividend yield rises to 11.3%, offering attractive income for investors. The dividend reinvestment plan remains in operation, providing shareholders with the option to acquire additional shares at a 2.5% discount to the volume weighted average price.

WAM Research’s ability to sustain this dividend level reflects strong portfolio gains and prudent capital management. The company’s net tangible asset (NTA) backing per share increased to $1.09 before tax, signaling solid underlying asset growth. The Board anticipates the dividend will remain partially franked at 60% in FY2026, contingent on portfolio performance and tax paid on realised profits.

Portfolio Composition and Key Holdings

The portfolio remains well diversified across sectors, with consumer discretionary (28.6%), healthcare (15.0%), and industrials (13.1%) representing the largest allocations. Notable contributors to performance included Generation Development Group, which benefited from strategic acquisitions and index inclusion, Sigma Healthcare following the Chemist Warehouse acquisition, and telecommunications company Tuas Limited with strong growth in Singapore and expansion prospects.

Conversely, some holdings such as Web Travel Group and Myer Holdings faced headwinds but are positioned for recovery amid improving market conditions and expected interest rate cuts. The investment team maintains a flexible cash position to capitalize on market volatility and emerging opportunities.

Governance and Management

WAM Research continues to be managed by MAM Pty Limited, part of the Wilson Asset Management Group, under the stewardship of experienced directors including Chairman Geoff Wilson AO. The company’s governance framework and financial controls were affirmed by an unqualified audit opinion from Pitcher Partners Sydney.

The Board remains committed to delivering long-term value through disciplined stock selection, active risk management, and shareholder engagement. Advocacy efforts on regulatory matters, including superannuation tax reforms and capital market dynamics, further demonstrate WAM Research’s role as a proactive market participant.