There are not many ASX dividend shares I'd be happy to own which have a dividend yield of more than 9%. The listed investment company (LIC) WAM Microcap Ltd (ASX: WMI) is one that I own and it comes with several positives.
The dividend yield is an appealing factor of the business, but there's more to it than just huge payouts.
WAM Microcap is run by the fund manager Wilson Asset Management. It is already been around for nine years, and I'm expecting it to in my portfolio for many years to come for a few reasons.
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Big dividend yield
Let's start by acknowledging how big the dividend yield is.
Pleasingly, the business grew its regular annual dividend per share each year between FY18 and FY23. It maintained the payout in FY24 and then increased dividend per share to 10.6 cents in FY25.
In other words, it has delivered a reliable level of dividends over the last several years, as well as a few special dividends.
At the time of writing, the FY25 payout translates into a dividend yield of 9.1%, including franking credits.
It ticks the yield and reliability boxes, but there are two other elements that are attractive.
Small ASX shares can make big returns
A LIC's job is to make investment returns for shareholders. Those returns can be generated in a variety of different ways, from various sized businesses.
The WAM Microcap investment team look for opportunities at the small end of the ASX share market, which comes with two key advantages.
Firstly, those stocks are much earlier on in their growth journey compared to the well-known ASX shares. They may have a much better earnings growth rate than their larger counterparts. Rising earnings is a key driver of higher share prices.
Second, small businesses are not as widely researched by investors as larger businesses. It's more likely that a small business will be overlooked and undervalued.
I think it's the above factors that have helped the WAM Microcap deliver an average return per year of 16.7% since inception in June 2017 (before fees, expenses and taxes). This level of return helps fund the large yield.
Diversification
WAM Microcap is not a highly concentrated portfolio of just a few names. It's invested in a variety of sectors, with dozens of stocks spread across areas like industrials, consumer discretionary, financials and IT. That gives it good diversification.
Some of its biggest holdings at the end of December 2025 were Autosports Group Ltd (ASX: ASG), Baby Bunting Group Ltd (ASX: BBN), FINEOS Corporation Holdings PLC (ASX: FCL), Generation Development Group Ltd (ASX: GDG), Kelsian Group Ltd (ASX: KLS) and Tuas Ltd (ASX: TUA).
While small caps can be volatile, it's not exposed too much to one business or one sector. It's a compelling investment for yield investors, in my opinion.
