I'm a big fan of ASX dividend shares. They can deliver real cash returns to our bank account each year, with some being pillars of stability.
I think the best ASX dividend shares are ones that can provide a good dividend yield upfront, while also delivering payout growth and capital growth.
Last week I decided to take advantage of the lower share prices and invest in the ASX dividend share WCM Global Growth Ltd (ASX: WQG). It's a listed investment company (LIC) that I think offers a number of appealing aspects.
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Yield
Passive income investors probably want to know about the dividend yield, so let's start there.
I like the LIC structure for dividends because of how it's up to the board of directors to decide on the level of the payout, assuming the company has the profit reserve to do so.
WCM Global growth has already issued dividend guidance for the year ahead. The next four quarterly dividends to be declared is expected to come to 9.3 cents per share, which equates to a grossed-up dividend yield of 8%, including franking credits, at the time of writing.
There are few LICs on the ASX that offer a yield that large and are delivering good payout growth.
Growth
The job of a LIC is to make investment returns for shareholders. With those investment profits, the ASX dividend share can deliver passive income.
It invests in a global portfolio of between 20 to 40 shares which are viewed as high-quality businesses with competitive advantages (economic moats) that are getting stronger.
Additionally, the fund manager looks for corporate cultures that are fostering those improving competitive advantages.
Since the LIC's inception in June 2017, it has delivered an average net return per year of 15.8% per year, outperforming the global share market return by an average of 2.7% per year.
That level of return is enough for the ASX dividend share to pay a large and growing dividend, while still delivering growth of the portfolio value over time.
Good value ASX dividend share
The final aspect of why I thought (and think) this was a good time to invest in the ASX dividend share was because it's trading at a cheaper price than its underlying value.
LICs regularly tell the market what the underlying value is with the net tangible assets (NTA) figure.
At the time of writing WCM Global Growth is trading at a 11% discount to the latest weekly NTA figure. That size of a discount is appealing, particularly when you consider how good the investment returns have been with the portfolio.
Additionally, I'm taking advantage of the dividend re-investment plan (DRP) to acquire shares at a slight discount.
