Why I think WAM Research Limited (ASX:WAX) is a solid investment choice

One of the best listed investment companies (LIC) on the ASX in my opinion is WAM Research Limited (ASX: WAX), operated by the high-performing Wilson Asset Management investment team.

A LIC’s purpose is to invest shareholder money into other shares it thinks are good opportunities.

WAM Research invests in undervalued growth companies where the investment team believe a catalyst could send the share price higher. It usually targets businesses that are industrial in nature.

It just revealed its monthly performance for August 2018, it showed a return of 2.9%, outperforming the ASX All Ordinaries Accumulation Index by 1.2% before fees and expenses.

But, one month isn’t significant – it’s the long-term that counts. Over the past seven years it has returned an average of 19.3% per annum, outperforming the benchmark by an average of 9% per annum during that time.

The strong performance has been achieved by WAM Research despite holding a high level of cash throughout that time period. Whilst the cash level has dropped in recent months, it still had 23.3% of the portfolio as cash at the end of August 2018.

One of the attractive features of WAM Research is that it pays out a lot of the returns generated as a growing dividend. Its dividend has grown each year since the GFC and it currently offers a grossed-up dividend yield of 8.1%.

Foolish takeaway

So, despite seemingly being a strong dividend candidate its underlying portfolio is actually very growth-focused. It’s just that the growth is regularly paid out by WAM Research as cash.

The main thing holding me back from buying at the moment is the current 27% premium to the pre-tax NTA. This is a very hefty premium to pay! It’s usually better to find investments trading at a discount to their underlying value.

If you want to find a better valued growth share than WAM Research, you should read this investment report.

The best dividend stock to buy this month

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 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 Scott Phillips.

The 5 mining stocks we’re recommending in 2019…

For decades, Australian mining companies have minted money for individual investors like you and me. But if you believe the pundits and talking heads on TV, those days are long gone. Finito! Behind us forever…

We say nothing could be further from the truth. To earn the really massive returns, you’ve got to fish where others aren’t fishing—and the mining sector could be primed for a resurgence. That’s why top Motley Fool analysts just revealed their exciting new research on 5 ASX miners they believe could help you profit in 2019 and beyond…


The best way we see to play the global zinc shortage… Our #1 favourite large-cap miner (hint: it’s not BHP)… one early-stage gold miner we think could hit the motherlode… Plus two more surprising companies you probably haven’t heard of yet!

For free access to our brand-new research, simply click here or the link below. But be warned, this research is available free for a limited time only, and we reserve the right to withdraw it at any time.

Click here for your FREE report!