Do you own WAM Capital Ltd (ASX: WAM) shares? If you do, you also own part of an underlying share portfolio. See, WAM Capital is a Listed Investment Company (LIC) which means it is a company that primarily invests in other companies' shares on behalf of its own owners and shareholders.
WAM Capital is one of the older LICs on the ASX. It was founded back in 1999 by Wilson Asset Management (the WAM in WAM Capital). Since then, it has averaged a return of 16.7% per annum (not including fees and taxes). Due to its longevity and returns, this LIC is now worth a whopping $2.06 billion market capitalisation.
So what exactly are you buying today if you invest in WAM Capital shares?
What do WAM Capital shares have under the hood?
Well, according to the company's latest update (valid as of 31 August), this LIC has 13.2% of its assets in cash with the remainder actively invested in a portfolio of "compelling undervalued growth opportunities in the Australian market".
Amongst its top 20 share positions, WAM Capital is invested in the following:
- Adbri Ltd (ASX: ABC)
- Ardent Leisure Group Ltd (ASX: ALG)
- Carsales.com Ltd (ASX: CAR)
- Codan Limited (ASX: CDA)
- IDP Education Ltd (ASX: IEL)
- Pendal Group Ltd (ASX: PDL)
- Pact Group Holdings Ltd (ASX: PGH)
- Select Harvests Limited (ASX: SHV)
- United Malt Group Ltd (ASX: UMG)
- Viva Energy Group Ltd (ASX: VEA)
- Virgin Money UK (ASX: VUK)
So if you own WAM shares, you indirectly own interests in those businesses too.
In terms of the overall portfolio, WAM also tells us that WAM Capital's current portfolio has the heaviest allocation to the consumer discretionary sector at 18.8% of the portfolio. Industrials is up next with 13.9%, followed by communication services at 9.1%.
How are WAM's dividends going?
WAM Capital has amassed a reputation for being an income friendly ASX share over the past few years by steadily paying out a generous stream of fully franked dividends.
It has paid an annual dividend of 15.5 cents per share every year since 2018 – a trend it will continue with this year. So with the current WAM share price, this dividend gives the company a yield of 6.62%, or 9.46% grossed-up with full franking.
However, in saying that, WAM Capital's share price remains well above its Net Tangible Asset (NTA) backing. WAM reported that WAM Captial's NTA stood at $1.97 per share on 31 August. Today's share price of $2.34 means you are effectively paying $2.34 for every $1.97 of assets, a premium of almost 19%.
