Wam Microcap Ltd (ASX: WMI) is paying a dividend yield of 7.6%, or 10.9% including franking credits, despite reporting an operating loss for the full year.
The fund's investment portfolio also underperformed, increasing just 0.1% for the year, while its benchmark, the S&P/ASX Small Ordinaries Accumulation Index, rose 8.1%.
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Could do better, fund manager says
WAM Microcap Lead Portfolio Manager Oscar Oberg said regarding the result:
Following eight consecutive years of outperformance since listing, FY2026 was a challenging year for the WAM Microcap investment portfolio. The underperformance relative to the benchmark was primarily driven by our limited exposure to resources companies during a period of exceptionally strong performance from the sector, combined with stock selection that was not at the level we expect. The strongest headwind for the portfolio was the significant divergence between resources and industrial companies. While this positioning detracted from investment portfolio performance in FY2026, we believe our focus on identifying undervalued micro-cap industrial companies will continue to create opportunities for shareholders over the long term.
Mr Oberg said the managers believed the fund was well-positioned at the start of the financial year, and they remain confident in the opportunities in the microcap sector.
Since inception, WAM Microcap has increased 14.4% per annum, outperforming the S&P/ASX Small Ordinaries Accumulation Index by 7.4% per annum.
Dividend yield still looking healthy
Wam Microcap will pay its fully-franked dividend of 5.35 cents on October 29 to shareholders on the register on October 16.
The dividend is up slightly from 5.3 cents for the same period last year.
Some of the fund's largest holdings include EDU Holdings Ltd (ASX: EDU), Artrya Ltd (ASX: AYA), and Echo IQ Ltd (ASX: EIQ).
The fund focuses on companies with a market capitalisation of less than $300 million at the time of acquisition.
Other Wilson funds also paying good dividend yields
The fund's dividend yield is better than others in the Wilson Asset Management Stable, with WAM Strategic Value Ltd (ASX: WAR), WAM Active Ltd (ASX: WAA), and WAM Income Maximiser Ltd (ASX: WMX) all paying solid dividends, yet not up to that level.
WAM Strategic Value reported earlier this month that it would pay an increased, fully-franked dividend of 6.5 cents per share, up 8.3% on the previous year and representing a yield of 5.9%.
This increases to 8.4% once franking credits are factored in.
WAM Active is paying the same return as WAM Strategic Value; however, if you include capital gains, it returned 40.2% for the year to the end of June.
