WAM Capital Limited (ASX: WAM) is a big listed investment company (LIC) that is soon going to pay its final dividend for the 2022 financial year.
The business pays a dividend every six months, with the second dividend of FY22 about to go ex-dividend.
Here are the details.
WAM Capital's latest dividend
The ex-dividend date for WAM Capital is 17 October, which is on Monday.
That means that today is the last day for investors to be able to buy WAM Capital shares to get entitlement to that dividend.
The LIC is going to pay investors a final dividend of 7.75 cents per share.
In terms of the payment date, it's only two weeks away. The dividend will be headed investors' way on 28 October.
How did the LIC afford this?
It has been a very volatile period for the ASX share market, which is where the Wilson Asset Management team go hunting for opportunities.
In the 12 months to 30 June 2022, which is the financial year this dividend comes from, the WAM Capital investment portfolio fell by 18.8%. That compares to just a 7.4% drop for the All Ordinaries Index (ASX: XAO).
However, the portfolio did better than the S&P/ASX Small Ordinaries Accumulation Index (ASX: XSOA), which fell by 19.5% over the year.
The LIC was able to pay a dividend because it had built up a profit reserve of investment returns generated from previous years.
It was noted by the company that it had 8.7 cents per share available in its profit reserve before the payment of this final dividend and it will have 1 cent per share after the payment.
In other words, it needs to generate enough investment returns this year to keep paying its dividend.
Since its inception in August 1999 to 30 June 2022, the investment portfolio generated gross (total) returns of 14.7% per annum. The LIC has been using the profits from previous financial years to afford the WAM Capital dividend.
What next?
There has been a lot of volatility in 2022. Markets continue to jump and fall as investors take in the latest inflation numbers, unemployment rates and so on.
For WAM Capital, its job is to find undervalued growth opportunities. There are plenty of ASX growth shares that have been sold off heavily.
At the end of August, some of the names in its portfolio included Hub24 Ltd (ASX: HUB), Idp Education Ltd (ASX: IEL), Xero Limited (ASX: XRO), and Webjet Limited (ASX: WEB).
It is due to hand in its monthly update today, so it will be interesting to see if the portfolio has changed much.
