I think that WAM Global Limited (ASX: WGB) is a great share for those investors who are older than 50.
If you’re in retirement, or getting closer to retirement, I think it becomes more important to have good diversification in your portfolio.
I also believe that most Aussie investors should have some exposure to shares that are listed overseas. The ASX only makes up 2% of the global share market.
Why WAM Global is a great share for investors older than 50
WAM Global is a listed investment company (LIC). That means the job of the investment team at Wilson Asset Management (WAM) is to invest in shares on your behalf.
Investors older than 50 may not have the time or desire to continually manage their investment portfolio. WAM Global can do the investing decisions for you.
As the name might suggest, this LIC invests in global shares.
What are some of the shares it owns right now? At the end of April 2020 it owned shares like Tencent, Amazon, Aon, Activision, CME Group, Costco, Doller General, Hasbro, Hello Fresh, Intuit, Logitech, Lowe’s, Microsoft and Nomad Foods. That’s a defensive group of names that’s suited to no matter what happens with the coronavirus.
What about the dividend?
LICs have the ability to turn capital gains made and investment income received into a smoothed dividend to investors older than 50 (and all other shareholders). WAM Global has been steadily growing its dividend since it started paying one. Keep in mind it only listed in June 2018.
It currently offers an annualised fully franked dividend of 6 cents per share. This amounts to a grossed-up dividend yield of 4.2%.
For investors older than 50 that’s not a huge yield. But it will probably keep growing over time. Just like the other WAM LICs have done.
Is it a good time to buy right now?
WAM Global’s share price has recovered strongly since 23 March 2020 – it’s up 47%. In March would have been the best time to buy. The share price discount to the net tangible asset (NTA) isn’t as big as it used to be. Australia’s dollar has continued to strengthen.
At the end of April 2020 it had a pre-tax NTA of $2.25, so today’s share price is an 8.5% discount to the NTA last month. Many share prices have been rising throughout May 2020, so the discount could be somewhere in the mid-teens.
I think it’s a good price today to buy for the long-term for investors older than 50, though be aware there could be another market fall later this year.