I believe that listed invested company (LIC) WAM Global Limited (ASX: WGB) could be a retiree's dream as a dividend share.
Three of the main things that retirees should be looking for in dividend shares are: sustainability of dividends, yield and growth.
What is WAM Global?
WAM Global is the internationally-focused LIC within the Wilson Asset Management portfolio. The job of a LIC is to invest in other shares or assets on behalf of shareholders.
It's looking for undervalued growth companies that are described as small or medium global shares. But in ASX terms those smaller global shares would actually be some of the larger ones within the ASX 50. The ASX is only around 2% of the global share market capitalisation, there are lots of opportunities out there.
Does WAM Global offer diversification and growth?
Normally you'd have to invest in multiple businesses to get diversification. WAM Global is a LIC, so just owning this one investment gives good diversification because it's invested in dozens of other shares itself.
Some of its current top holdings include shares like HCA Healthcare, American Express, Airbush, Logitech, Aon, LVMH, Hasbro, Diageo, S&P Global and Ubisoft.
The above businesses are a broad group of companies with good growth prospects at relatively good prices. They provide attractive global diversification.
WAM Global doesn't have to stay invested in these businesses forever though. It can sell if the thesis doesn't work out or if the valuation gets too high.
What about the WAM Global dividend?
LICs pay out dividends from net investment returns they make. As long as WAM Global keeps making long-term investment returns then it can keep paying a dividend. WAM Global is still quite new so it's building its profit reserve and its dividend streak.
WAM Global just declared its dividend for the December 2019 half-year result, it will pay a fully franked dividend of 3 cents per share, a 50% increase from the 2 cents per share dividend paid six months before.
WAM LICs generally pay the same dividend for a rolling 12 months and then increase the dividend. That means that the current WAM Global grossed-up dividend yield is at least 3.9%. I expect the dividend and yield will rise as WAM Global keeps delivering solid investment returns.
WAM Global is invested in growing businesses, which should see the share price and dividend supported by growing earnings from its holdings.
Is it a good time to buy shares?
WAM Chairman and Chief Investment Officer Geoff Wilson just bought shares, which is a big vote of confidence to buy WAM Global shares today.
Last Thursday WAM Global said that its share price was trading at an 11% discount to its net tangible assets (NTA) per share. That's an attractive discount. I'd be happy to buy some shares today, particularly with recent weakness due to the coronavirus.
