I think that WAM Leaders Ltd (ASX: WLE) could be a good ASX share to buy for a retirement portfolio.
WAM Leaders is one of the larger and newer listed investment companies (LICs) operated by Wilson Asset Management.
The key difference with this LIC is that it only targets the large caps on the ASX. It’s planning a merger with Century Australia Investments Limited (ASX: CYA) which could see the management expense ratio reduce by around 0.25% as a result of the removal of duplicated expenses.
I can understand why retirees wouldn’t want to invest in volatile smaller companies, they may only want to stick with the biggest and most well-known ASX shares. This is exactly what WAM Leader’s portfolio is full of.
It owns the big blue chips like CSL Limited (ASX: CSL) and Macquarie Group Ltd (ASX: MQG) as well as some of the growth businesses that are a little smaller such as Treasury Wine Estates Ltd (ASX: TWE).
Since inception in May 2016, WAM Leaders’ portfolio has outperformed the S&P/ASX 200 Accumulation Index by an average of 1.2% per annum before fees and expenses. The outperformance has been reduced in recent months due to the volatility.
Retirees need investment income to live off. WAM Leaders has increased its dividend each year since it started paying one in 2017. It currently offers a grossed-up dividend yield of 6.7%.
I think the income offered by WAM Leaders is attractive and should be able to grow every year barring a market crash. It’s currently trading at a slight discount to the underlying portfolio value at the end of November 2018, so it’s a decent time to buy some shares.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Treasury Wine Estates Limited. 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.