The WAM Capital Limited (ASX: WAM) share price has soared 6% after announcing another large dividend for shareholders in the HY23 result.
WAM Capital is one of the largest listed investment companies (LICs) on the ASX, it’s currently valued at $1.7 billion.
HY23 result
These are some of the highlights from the HY23 update:
- Gross portfolio return of 8.1% over six months to 31 December 2022
- Underperformed the S&P/ASX All Ordinaries Accumulation Index return of 9.6% over the six months to 31 December
- Outperformed the S&P/ASX Small Ordinaries Accumulation Index return of 7% over the six months to 31 December
- HY23 dividend announced of 7.75 cents per share
- Profit reserve at the end of January 2023 of 11.9 cents per share
Management commentary
WAM Capital lead portfolio manager Oscar Oberg said:
2022 proved to be a challenging year for equity markets, and in particular small-cap companies. Over the past 20 years we have seen many cycles in the market and believe our proven investment process can generate robust returns over the long term. As we head into 2023 we are optimistic on the outlook for small and mid-cap companies, with the investment portfolio already delivering strong returns in January.
The WAM Capital Chair Geoff Wilson AO said:
We are pleased that through WAM Capital’s long-term investment performance focused on identifying undervalued growth companies, the company has been able to return almost $1.5 billion in dividends and franking credits to shareholders since inception.
Strong start to second half
In January 2023, the investment portfolio increased 6.6%, outperforming the S&P/ASX All Ordinaries Accumulation Index and bringing the estimated profit reserve to 14.7 cents per share. That would mean WAM Capital is getting close to having a rolling 12 months of profit to be able to pay dividends to shareholders.
Final thoughts on the WAM Capital share price
It’s impressive that WAM Capital manages to keep making enough profit to keep paying the same dividend.
I like to be able to buy businesses at a discount to what they’re worth. I’m not sure if the WAM Capital share price is at good enough value compared to its underlying value, the net tangible assets (NTA), to warrant an investment today – the next couple of monthly NTA updates will be interesting to scrutinise.
Of the WAM LICs, I think WAM Microcap Limited (ASX: WMI) could be the better choice as small shares could produce stronger returns over time.
