I think that WAM Global Limited (ASX: WGB) is a future dividend star and it could be very cheap to buy today.
About WAM Global
WAM Global is a listed investment company (LIC) that is run by Wilson Asset Management (WAM). It's the only LIC in the WAM stable that looks at international shares.
It has only been running for a couple of years. However, the investment team behind the LIC have plenty of investment experience.
What type of shares does WAM Global invest in?
Its tagline is investing in 'the world's most compelling undervalued growth companies'. When you look at its top holdings you'll see that it can own a share from any region. It can look at shares with pretty small market caps by international standards.
Looking at the geographic exposure, at 31 March 2020 over half of the portfolio was invested in US shares, then 5.2% is in Swiss shares, 3.5% in Japan, 3.4% in Hong Kong, 3.2% in Germany, 2.6% in France and the rest is 'other'. Cash made up 19.5% of the portfolio.
In terms of actual holdings, at the end of March 2020 these were some of its holdings: Tencent, CME Group, Costco, Dollar General, Hasbro, Hello Fresh, Intuit, Logitech, Lowe's, Microsoft, Nestle, Nomad Foods, Paypal and Ubisoft.
Why is it a future dividend star?
The WAM LICs are known as being some of the best dividend-paying LICs on the ASX. Their strong investment performances allows them to pay big dividends.
WAM Global recently increased its dividend by 50% to 3 cents per share. That's an annualised 6 cents per share dividend – a grossed-up dividend yield of 4.5%.
I expect the dividend and the yield will keep increasing in the coming years. The ability to invest anywhere in the world is a powerful strategy that will help WAM Global find the best opportunities.
Why I think it's cheap
I believe there's a double discount when it comes to WAM Global. The investment team believe the shares they own are undervalued. And then the WAM Global share price seems to be trading at an attractive discount to the net tangible assets (NTA). The coronavirus has really hurt valuations.
WAM Global is currently trading at a 15% discount to the March 2020 NTA update. In April the MSCI World Index (AUD) has risen by around 3.5%, which probably means WAM Global's NTA discount today may be closer to 20% than 15%.
Foolish takeaway
I think WAM Global looks like a very good way to get specific exposure to quality international shares, with a good dividend yield that's going to keep growing over time. I'd be happy to buy a parcel of shares today.
