The WAM Capital Ltd (ASX: WAM) share price is in focus today after reporting a 10.5% decline in its investment portfolio for FY2026 and announcing a maintained final dividend of 7.75 cents per share, partially franked at 60%.
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What did WAM Capital report?
- Full year FY2026 dividend of 15.5 cents per share, partially franked at 60%, maintained
- Final dividend of 7.75 cents per share, payable 21 October 2026
- Operating loss after tax of $125.9 million (FY2025: profit of $219.6 million)
- Investment portfolio declined 10.5% in FY2026, underperforming key ASX indices
- FY2027 dividend target reduced to 8.0 cents per share to preserve capital
- Pre-tax net tangible assets (NTA) at $1.22 per share at 30 June 2026
What else do investors need to know?
The Board's decision to cut the FY2027 dividend target to 8.0 cents per share comes after years of paying out more in dividends than was earned, drawing down the profits reserve from $1.48 per share to just 5.6 cents per share after the latest payout. The reduction aims to protect WAM Capital's capital base and rebuild its profits reserve.
In FY2026, WAM Capital's portfolio underperformed compared to the broader S&P/ASX All Ordinaries Accumulation Index (up 5.7%) and S&P/ASX Small Ordinaries Accumulation Index (up 8.1%). The main challenges were sector positioning and tough conditions for small-cap industrials, as larger companies and AI beneficiaries attracted most investor attention.
WAM Capital remains focused on a diversified portfolio, with notable holdings in Artrya Limited, GemLife Communities, Aussie Broadband, and Maas Group. The investment team has increased cash holdings (11.5% of the portfolio) and repositioned assets looking for better returns in FY2027.
What did WAM Capital management say?
Chairman Geoff Wilson AO said:
Since FY2020, the Board has maintained WAM Capital's full year dividend at 15.5 cents per share. Over that period, the dividends paid by the Board exceeded the profits generated, drawing down the Company's accumulated profits reserve. Maintaining the dividend at 15.5 cents per share is no longer sustainable with the profits reserve available.
We recognise the impact a reduction in the FY2027 full year dividend target to 8.0 cents per share will have on shareholders. The FY2027 target is intended to rebuild the profits reserve, preserve the Company's capital base and place WAM Capital in a stronger position to deliver sustainable income and capital growth for shareholders.
What's next for WAM Capital?
The Board has set a more sustainable FY2027 dividend target, aiming for 8.0 cents per share, split evenly between interim and final dividends, still partially franked at 60%. Achieving this will depend on generating additional profits through positive portfolio performance in FY2027, so the dividend target is not a formal forecast or guarantee.
Management is optimistic about the potential for recovery, particularly for undervalued smaller companies, as interest rates stabilise and market conditions improve. WAM Capital plans to maintain its active, diversified approach and is positioned to benefit if conditions for small-to-mid-cap stocks pick up.
