The WAM Global Limited (ASX: WGB) share price is rising after revealing a large dividend in its FY21 result.
WAM Global FY21 result
It has revealed that it made a record total shareholder return in FY21 of 45.9%. That represents the combined return of the WAM Global share price and the dividend together.
In terms of the company’s accounting profit, it saw a record operating profit before tax of $137 million (up from $7.1 million) and a record operating profit after tax of $95.9 million (up from $5 million).
However, a listed investment company (LIC) can see wild swings of its profit as its investment portfolio can achieve strong gains (showing profit) and also see declines when the share market goes down (which LICs have to report as a loss, even if they don’t sell those shares) in any given year.
In percentage terms, the WAM Global investment portfolio (before fees, expenses and taxes) outperformed the MSCI World Index by 3.2% with a return of 30.7%.
WAM Global dividend
The board has decided to pay a final fully franked dividend of 5 cents per share, representing an increase of 25% on FY20.
This means the full year dividend is 10 cents per share, representing an increase of 42.9% on the FY20 dividend.
Bonus options and proposed takeover
In February 2021, the board announced a one for one bonus option issue to all shareholders, providing shareholders with the opportunity to buy a WAM global share at $2.54 per option.
The global LIC also recently announced that it’s going to acquire Templeton Global Growth Fund Ltd (ASX: TGG) which will grow the size of WAM Global, improve liquidity and it’s expected to reduce the fixed expense ratio to the benefit of all shareholders.
Portfolio
Catriona Burns, Lead Portfolio Manager of WAM Global, said:
“We remain committed to employing our proven investment process to build a diversified portfolio of undervalued global growth companies and delivering value for all shareholders.”
At 30 June 2021, some of its biggest positions include: Icon, Avantor, Visa, Fiserv, Carrier Global and Intercontinental Exchange.
Summary thoughts on WAM Global and the share price
WAM Global had a pretty solid FY21. Outperforming the index is a pleasing result. Income investors will be particularly pleased by the large dividend increase.
I like looking at LICs when they trade at a discount to their underlying value (the NTA – net tangible assets) and offer a good dividend yield. WAM Global is one I have my eyes on, but I’d prefer to buy it at a share price to NTA discount of 10% or more. It currently offers a fully franked dividend yield of 3.75%.
For now, there are other ASX dividend shares higher on my watchlist.
