The ASX dividend share WAM Microcap Ltd (ASX: WMI) is a leading listed investment company (LIC) that I think is one of the leading options for a high level of passive income.
WAM Microcap is certainly not as high profile as names like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP), but I think it could better for dividend income in the years ahead.
The job of a LIC is to invest in other shares/assets that the investment team believes can deliver pleasing returns. WAM Microcap specifically aims to invest in the most exciting undervalued growth opportunities in the Australian microcap market.
Let's look at three reasons why I think this ASX dividend share is a good, long-term buy.
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Good performance
With LICs, I think it's important to look at the capability of that LIC to deliver good returns. Only good ones are worth investing in.
A LIC pays for its dividends from the net investment returns that it generates. For a dividend to be sustainable, a LIC needs to generate strong enough returns to pay those payments (and hopefully more for capital growth).
I believe the WAM Microcap investment team are very skilled at finding investment opportunities at the small-cap end of the market to help outperform the broader ASX share market.
In its April 2026 update, WAM Microcap said that its portfolio had generated an average return per year of 14.2% since inception in June 2017, twice as good as the small-cap market return.
This great performance over the long-term has allowed WAM Microcap to grow its profit reserve to 55.4 cents per share.
Great dividend yield
One of the main reasons why the business is a compelling passive income idea is that it pays a very large dividend yield.
The ASX dividend share expects to pay an annual dividend per share of 10.7 cents in FY26.
That means, at the timing of writing and the current WAM Microcap share price, it offers a FY26 grossed-up dividend yield of around 9.5%, including franking credits.
There are not many ASX dividend shares with a dividend yield that high that I expect can continue growing the payout.
Track record of payout growth
The LIC has grown its annual dividend almost every year since FY18, with the only year it didn't grow the payout being FY24.
It started paying a dividend in FY18 and then increased its payout in FY19, FY20, FY21, FY22, FY23, FY25 and FY26.
If I invest in an ASX dividend share, I want to have a high level of confidence the business is likely to increase the payout again in the following financial year. With the large profit reserve, I think WAM Microcap is capable of ongoing dividend growth.
Even a slight increase each year is very welcome to help offset inflation impacts.
But, WAM Microcap isn't the only ASX share I'd consider for long-term passive income.
