Is this the best dividend share on the ASX with its 11% dividend yield?

Is WAM Capital Limited (ASX:WAM) the best dividend share on the ASX with a 11% dividend yield?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Is WAM Capital Limited (ASX: WAM) the best dividend share on the ASX with its grossed-up dividend yield of 11%?

WAM Capital is the flagship listed investment company operated by the high-performing team at Wilson Asset Management.

This morning, we learned that WAM Capital Chairman Geoff Wilson had bought 93,581 WAM Capital shares on the market yesterday for just over $182,100. That investment is by no means a large one compared to the rest of his assets, but it's an interesting vote of confidence.

The WAM Capital share price has fallen 11% over the past month and 19% over the past six months. The share price decline can be attributed to dividends being paid out, a decline in value of the WAM Capital portfolio over the past six months and a narrowing of the share price premium compared to the net tangible assets (NTA) per share.

Geoff Wilson has often said he doesn't like buying things at a premium. Looking at the March 2019 WAM Capital NTA of $1.85, the $2 share price is still an 8% premium – although the NTA may have grown during April. However, the premium is the smallest it has been for some time, it has been above 20% for a lot of the past couple of years.

WAM Capital aims to steadily increase the dividend if it has the profit reserve to do so. It has increased its dividend each year since the GFC and the last two dividends amount to a grossed-up dividend yield of 11%.

If the WAM Capital dividend is maintained (and increases) over the foreseeable future then a 11% yield is clearly very attractive. But, it will require a quick turnaround of investment performance to ensure the profit reserve doesn't run out.

The past year has been difficult for investors in smaller ASX shares. If you've been monitoring WAM Capital for some time then now could be the time to strike. But, the LIC only has the next year of dividends covered with its profit reserve.

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.

More on ⏸️ High Yield

⏸️ High Yield

3 secret ASX dividend shares with large yields

These 3 ASX dividend shares are small but they have large dividend yields. One pick is Pacific Current Group Ltd…

Read more »

asx share price dividend yield represented by street sign saying the word yield.
⏸️ High Yield

3 ASX dividend shares with yields above 5%

The 3 ASX dividend shares in this article have yields of more than 5%. One of them is furniture business…

Read more »

ASX shares represented by gold letters spelling ASX sitting atop a line graph
⏸️ High Yield

4 small cap ASX dividend shares with large yields

In this article are 4 small cap ASX dividend shares with large dividend yields including Pacific Current Group Ltd (ASX:PAC).

Read more »

fingers walking up piles of coins towards bag of cash signifying asx dividend shares
⏸️ High Yield

3 ASX shares with large dividend yields

In this article are 3 ASX dividend shares with large dividend yields. One of those businesses is Pacific Current Group…

Read more »

⏸️ High Yield

Macquarie's latest ASX "buy" idea has a 10% yield

It may have been high-growth tech stocks that have dominated but the latest ASX “buy” idea from Macquarie may be…

Read more »

⏸️ High Yield

Get paid huge amounts of cash to own these ASX dividend shares

I think that these ASX dividend shares can pay large amounts of cash to investors needing income, with good stability…

Read more »

⏸️ High Yield

Meet the ASX 200 stock with a dividend yield that'll hit ~14% in FY22

High yield stocks have lost out to high growth momentum stocks. But this could be the time to be buying…

Read more »

⏸️ High Yield

Are these high yield ASX dividend shares worth buying?

Are the high yield ASX dividend shares in this article worth buying? One of the considerations is Telstra Corporation Ltd…

Read more »