The WAM Capital Limited (ASX: WAM) share price has risen by 6% over the last month. What may be next for the listed investment company (LIC)?
What is WAM Capital?
For readers that haven't heard of WAM Capital before, it's a LIC. The purpose of a LIC is to invest in other shares on behalf of shareholders.
This is the biggest of the WAM LICs, of which there are several. WAM Capital says that it looks for the most compelling undervalued growth opportunities in the Australian share market.
According to the ASX, it currently has a market capitalisation just over $2 billion.
What has happened in the last month?
WAM Capital's share price rose 5% in the week after delivering its FY21 result.
The LIC reported that it made a record operating profit before tax of $343.3 million. That was a reversal from the operating loss before tax of $47.2 million in FY20. It also made a record operating profit after tax of $266.6 million, which was a turnaround from the operating loss after tax of $26.7 million.
In percentage terms, WAM said that over FY21 its investment portfolio increased by 37.5% (before expenses, fees and taxes), outperforming the S&P/ASX All Ordinaries Accumulation Index by 7.3%.
WAM Capital saw a total shareholder return over the 12 months to 30 June 2021 of 28.9%. That's the combined return of dividends and share price growth.
The LIC declared a fully franked final dividend of 7.75 cents per share, bringing the full year dividend to 15.5 cents per share. WAM Capital noted that the LIC had a profit reserve of 21.8 cents per share as at 31 July 2021, before the payment of the final dividend.
Investor presentation
Last week, WAM Capital also released an investor presentation.
It noted that based on the 7 September 2021 share price of $2.33 it had a fully franked dividend yield of 6.7% and a grossed-up dividend yield of 9.5% (which is including the benefit of franking credits into the yield).
In that investor presentation, WAM Capital said that its investment strategy is now shifting from COVID-19 beneficiaries to the Australian re-opening.
Some of the ASX shares that it pointed out as holdings were Universal Store Holdings Ltd (ASX: UNI), Ardent Leisure Group Ltd (ASX: ALG), Event Hospitality and Entertainment Ltd (ASX: EVT), Viva Energy Group Ltd (ASX: VEA) and Maas Group Holdings Ltd (ASX: MGH).
At the end of July 2021, some of the other top 20 ASX share holdings in the WAM Capital portfolio were: Australian Clinical Labs Ltd (ASX: ACL), City Chic Collective Ltd (ASX: CCX), Reliance Worldwide Corporation Ltd (ASX: RWC) and Webjet Limited (ASX: WEB).
What is the current WAM Capital yield?
At the WAM Capital share price of $2.33, the annual dividend of 15.5 cents translates to a fully franked yield of 6.6% and a grossed-up dividend yield of 9.5%.
The ex-dividend date for the final dividend is 18 October 2021.
