WAM Microcap Limited just reported a big profit and started paying dividends

WAM Microcap Limited (ASX: WMI) just reported its result to 31 December 2017.

WAM Microcap is one of the listed investment companies (LICs) run by Wilson Asset Management, it focuses on the smallest end of the market.

This is the LIC’s first report, so there aren’t many comparative figures. The below figures are for the period between 8 March 2017 and 31 December 2017

It recorded net realised and unrealised gains on its shares of $38.9 million and $2.2 million of other revenue, which was mostly dividends received.

Management fees came in at $935,274 and it paid $308,784 in brokerage. Performance fees were $2.47 million due to its outperformance.

Net profit after tax (NPAT) for the period was $26,475,000. Earnings per share (EPS) calculated from 23 June 2017 (the allotment date) was 18.91 cents.

WAM Microcap’s portfolio increased by 27.2% since inception whilst only being invested 79.1% on average, this outperformed the S&P/ASX Small Ordinaries Accumulation Index by 8.6%. This performance is before expenses such as management fees.

The pre-tax net tangible assets (NTA) per share increased by 24.4% for the period ended 31 December 2017.

The total shareholder return for WAM Microcap for the period to 31 December 2017 was 32.7%, this was mostly from the portfolio performance of 27.2% but also the rise in the share price’s premium to the NTA value.

WAM Microcap’s board has declared a dividend of two cents per share, which will be paid on 27 April 2017.

WAM Microcap Chairman, Geoff Wilson, said “As we have deployed $154 million of shareholders’ capital, our focus has continued to remain on our investment objectives – providing a stream of fully franked dividends to shareholders while preserving their capital and preserving their capital and providing capital growth”.

Foolish takeaway

This was a very impressive first report by WAM Microcap, with an excellent portfolio return. I wouldn’t expect the next six months to be anywhere near as good, but I do believe the WAM Microcap investment team will continue to soundly outperform its benchmark and the main Australian indexes.

If we assume another two cent dividend in six months the current grossed-up dividend yield is 3.78%, but I imagine management will bring the yield up to the level of the other WAM LIC yields in the region of 8% or more once WAM Microcap has more profit reserves.

It’s currently trading at a 16.8% premium to the January 2018 post-tax NTA, it isn’t cheap. This is a smaller premium compared to WAM Capital Limited (ASX: WAM) and WAM Research Limited (ASX: WAX). I would still say WAM Research is my favourite WAM LIC, followed by WAM Microcap and then WAM Capital.

Another top dividend choice could be this fast-growing share.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool's dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Tristan Harrison owns shares of WAM Capital Limited, WAM MICRO FPO, and WAM Research Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.