What did WAM Global report?

• Investment portfolio declined 4.2% for the twelve months to 30 June 2026
• MSCI World Index (AUD) benchmark rose 14.8% over the same period
• Fully franked full year dividend increased to 13.2 cents per share
• Fully franked final dividend of 6.6 cents per share, payable 16 November 2026
• Reported operating loss before tax of $50.3 million (last year: $147.6 million profit)
• Operating loss after tax was $35.2 million (last year: $103.3 million profit)

What else do investors need to know?

The Board highlighted that the fund's listed investment company structure and profits reserve enabled ongoing payment of fully franked dividends, even during challenging market conditions. Shareholders benefit from a fully franked dividend yield of 6.0% and a grossed-up yield of 8.6%, both well above global equity averages.

Performance lagged its benchmark primarily due to historic concentration of returns among AI-driven companies and a 4.3% negative impact from a stronger Australian dollar. While WAM Global held several AI beneficiaries, this was not enough to outpace broader markets as seen over the year.

The company's experienced investment team maintains a diversified, quality-focused portfolio. Participation in the dividend reinvestment plan (DRP) is available, with new shares issued at the VWAP following the ex-dividend date, and no discount applied.

What did WAM Global management say?

Chairman Geoff Wilson AO said:

The benefits of the listed investment company structure, together with the profits reserve available, have enabled the Board to continue to provide fully franked dividends to shareholders through market cycles. The investment team remains focused on our proven investment process, particularly during times where there is a lack of breadth in the market.

What's next for WAM Global?

Looking ahead, WAM Global's management remains disciplined and focused on investing in high-quality AI beneficiaries across sectors such as hardware, infrastructure, and semiconductors, while avoiding speculative names with stretched valuations.

Despite ongoing market volatility and elevated index valuations, WAM Global expects ongoing dispersion in company returns to create opportunities for patient, value-seeking shareholders. The team is committed to using its investment process to identify undervalued growth companies and maintain dividend payments through various market cycles.

View Original Announcement

The post WAM Global lifts dividend despite underperforming global benchmark appeared first on The Motley Fool Australia.

Each state has a different school holiday period, with NSW, Queensland, and Victoria among the states commencing holidays today.

Tasmania has the latest school holiday schedule this Easter season. The school break in our smallest state runs from 18 April to 3 May.

So, here's a list of all the ASX shares due to go ex-dividend over the coming weeks through to 3 May.

In order to receive a dividend, you must own the ASX share prior to its ex-dividend date.

Ex-dividend dates give ASX investors two opportunities.

Either buy before the date to receive the dividend, or wait until ex-dividend day, when the share price will likely drop, to buy then.

ASX shares with ex-dividend dates this month

The post 21 ASX shares going ex-dividend over the school holidays appeared first on The Motley Fool Australia.

I don't wish I could take these back in hindsight because every mistake is a lesson that stops us from making bigger mistakes (with more money) down the road. But that doesn't mean that I don't still regret some of my mistakes. I'm only human, after all.

So today, I'm going to discuss one of my biggest regrets when it comes to an ASX share buy. Hopefully, you can learn the same painful lessons that I did, without the money-losing part.

The mistake in question was buying shares of WAM Global Ltd (ASX: WGB). WAM Global is a listed investment company (LIC) run by Wilson Asset Management (the WAM).

It only launched in 2018, and I was one of the buyers who participated in the initial public offering (IPO). Why? Well, I had an idea that WAM was a successful asset manager, thanks to the high dividend yields offered by some of their other LICs like WAM Capital Ltd (ASX: WAM). Not to mention a slick marketing campaign.

So WAM Global IPOed for $2.20 a share in June 2018, and I was now a new owner of this company.

Breaking down one of my biggest ASX share buy regrets

Unlike most WAM LICs, WAM Global invests in companies from outside the ASX, as its name implies. I was excited by the ambitious scope of this project.

But after a while, my faith was fading. It wasn't just that the WAM Global share price fell at IPO and continued to fall. Perhaps WAM was overambitious when it came to its asking price. Either way, it didn't take me long to start racking up my first paper losses. By the end of 2018, WAM Global shares were under $2 each.

But that wasn't why I was starting to question my decision. I am patient when it comes to waiting for an investment thesis to pay off. What I had little patience for was a lack of transparency.

WAM Global rarely discussed its actual shareholder returns. What it did discuss was its portfolio's underlying performance, which is not the same thing when it comes to an LIC. But even that did not account for the liberal management fees I, alongside other shareholders, were paying.

I had to go digging to find out that WAM Global charges its shareholders an annual management fee of 1.25% per annum. Which is not reflected in its portfolio performance metrics.

Late last year, I sold out of my WAM Global shares. I wish I had done so sooner in hindsight, but I still crystallised a loss on my original investment. I think I may have broken even after accounting for the dividend returns. But even so, this is after more than four years of holding those shares. Thus, we get to the conclusion of one of my biggest ASX share buy regrets.

I would have done so much better just owning an index fund. That way, I could have gotten some decent returns and paid a far more appealing management fee of under 0.1% per annum in doing so. Heck, I probably would have been better off keeping the cash in a term deposit.

But you live and you learn. Yesterday, WAM Global closed at $1.87 a share. I'm certainly glad I didn't wait any longer than I did to wipe my hands off one of my biggest investing regrets.

The post This ASX dividend share was one of my biggest buy regrets appeared first on The Motley Fool Australia.

At all, a 6% dividend yield, especially one with full franking credits, isn't too common a sight on the ASX. To illustrate, not one of the dividend-heavy big four banks currently offers a yield over 5.7% right now.

Yet that's what the listed investment company (LIC) WAM Global Ltd (ASX: WGB) currently has on the table.

WAM Global is a LIC that is run by Wilson Asset Management. It attempts to invest in a portfolio of globally sourced "compelling undervalued growth companies" on behalf of its shareholders.

This 6% dividend yield comes from the company's last two dividend payments. These were the October final dividend of 5.5 cents per share, and the May interim dividend, also worth 5.5 cents per share. That total of 11 cents per share in 2022 was an increase over the 10 cents per share investors enjoyed in 2021.

Yet I'm not buying this company. In fact, I'm not even tempted. Here's why.

Why I wouldn't buy WAM Global, even with a 6% dividend yield 

There are two main reasons. The first is performance. WAM Global first IPO-ed back in mid-2018, for a price of $2.20 per share. Today, almost five years later, the company's share price remains well below its IPO price, at $1.82 at market close on Friday. That's a capital loss of more than 16%:

According to Wilson Asset Management, the company's underlying portfolio has delivered an average of 4.9% per annum (as of 31 December 2022) since IPO. But that doesn't help the capital returns investors have actually enjoyed from their shares.

That figure also doesn't include WAM Global's fee, which is the second reason.

WAM Global charges an annual management fee of 1.25%, plus a performance fee. That's well on the higher end of what managed investments typically charge on the ASX.

By comparison, the Vanguard Australian Shares Index ETF (ASX: VAS) index fund has a fee 12.5 times cheaper than WAM Global at 0.1% per annum. Yet it's vastly outperformed this LIC over its lifetime.

So I'll be saying no to WAM Global's 6% dividend yield. A big yield doesn't mean much when your capital base has been eaten away by lacklustre performance and fees.

The post This ASX dividend share has a 6% yield, but I'm still not buying appeared first on The Motley Fool Australia.

My 3 largest ASX share positions

My third largest position: WAM Global Ltd (ASX: WGB)

WAM Global is a listed investment company (LIC) that was first listed on the ASX back in 2018. It is run by Wilson Asset Management and aims to invest in a basket of undervalued growth shares from around the world.

Unfortunately, WAM Global hasn't had a very successful life on the ASX so far. Today, its share price is well under the $2.20 it first floated at in mid-2018. Saying that, WAM Global has managed to build an impressive dividend track record, raising its payouts from 7 cents per share in 2020 to 11 cents per share in 2022.

Sadly, I will be looking to exit this position in 2023. It hasn't delivered the growth I had hoped for, and I would have been far better putting my money in an index fund.

Additionally, although Wilson Asset Management doesn't make WAM Global's fee easy to find, I am no longer happy paying the rather steep and (in my opinion) indefensible 1.25% slug that this LIC charges every year for this chronic underperformance.

My second largest ASX share: VanEck Vectors Wide Moat ETF (ASX: MOAT)

This ASX exchange-traded fund (ETF) has pride of place in my portfolio. It's an investment I have owned for a very long time, and one I can't ever see selling. This ETF is not an index fund. Rather, it invests in a relatively concentrated portfolio of US shares.

These shares are selected for possessing an intrinsic competitive advantage, or 'moat'. This is a concept popularised by the legendary Warren Buffett and gives most winning shares their edge. This ETF has smashed the returns of most index funds over the years, and thus an investment I am very happy to hold going into 2023.

My largest share: Washington H. Soul Pattinson and Co Ltd (ASX: SOL)

Unlike WAM Global, this is an ASX share I would love to own way more of. Soul Patts is an investing conglomerate with an incredibly diverse portfolio of both listed and unlisted assets. This gives me instant diversification through just one ASX share.

Soul Patts has a very impressive performance track record. It has given its investors market-crushing returns for decades, as well as an annual dividend pay rise every year since 2000. For these reasons, I am proud to carry Soul Patts as my largest ASX holding into 2023

The post My 3 largest ASX share positions heading into 2023 appeared first on The Motley Fool Australia.

This move comes as the company unveiled its FY2021 full-year earnings results this morning. And it makes for some interesting reading.

WAM Global is one of the more recent WAM ASX LICs to hit the share market, only listing back in 2018. But in the past 3 or so years, this company has certainly made a reputation for itself as a top performer in the ASX LIC space. Its investment portfolio has managed to deliver an average return of 16% per annum over the past 2 years, and 30.7% over the past 12 months.

ASX LIC WAM Global delivers record profits, ups dividends

Today's numbers probably won't do anything to dent this reputation either. WAM Global reported that it has delivered a record operating profit before tax of $137 million for FY2021. That's up quite a bit from FY2020's profit before tax of $7.1 million. After tax, the company reported a profit of $95.9 million. That's also up substantially from FY2020's $5 million profit after tax.

WAM Global's management tells us that including the dividends paid out, as well as the Net Tangible Asset (NTA) to share price gap of WAM Global narrowing from 18.2% at the start of FY21 to 3.9% at its conclusion, total shareholder return for the financial year stands at 45.9%.

WAM Global had previously flagged that it would be paying out an annual dividend of 10 cents per share in FY2021. And today's results have confirmed it. Investors will be receiving the 5 cents per share final dividend (which comes fully franked) on 4 November this year. That's a 25% increase on FY2020's final dividend of 4 cents per share.

WAM Global will be paying out 10 cents a share for FY21. This represents a 42.9% increase in dividend payments from FY2020's 7 cents per share.

Some of this LIC's top shares

The company also gave investors a glimpse into its current investment portfolio (as of 30 June anyway). WAM Global's largest holding is Irish pharmaceutical company Icon plc (NASDAQ: ICLR), at 3.9% of the portfolio. Other significant holdings include payments giant Visa Inc (NYSE: V) and Avantor Inc (NUSE: AVTR). As well as Electronic Arts Inc. (NYSE: EA) and Chinese e-commerce titan Tencent Holdings Ltd (HKG: 0700).

At the current WAM Global ASX share price, the company has a market capitalisation of $627.5 million. With investors receiving 10 cents per share in dividends in 2021, WAM GLobal's ASX shareholders can expect a forward dividend yield of 3.75% on current pricing, or 5.35% grossed-up with full franking.

The post This WAM ASX LIC just posted record profits and dividends appeared first on The Motley Fool Australia.

WAM Global is one of WAM's newer LICs, only hitting the ASX back in 2018. It was a first for the fund manager, considering WAM Global would be the first Wilson LIC to focus on companies outside the ASX (hence the name).

Since its ASX IPO back in June 2018, WAM Global has gone on to deliver an average performance of 12.1% per annum since. This includes some healthy dividend growth as well. WAM Global shares today offer a fully franked trailing yield of 3.5%.

WAM's ASX wedding bells toll

Well today, it seems WAM Global is set to grow even larger. In an ASX announcement this morning, WAM Global told investors it has entered into a scheme with Templeton Global Growth Fund Ltd (ASX: TGG). This will allow the two funds to merge. Under the scheme, all Templeton shareholders will receive WAM Global shares and options. Shareholders can also choose to have their shares bought back by WAM for a cash consideration if the scrip offer isn't appealing.

The exact cash/scrip numerations have yet to be determined. But WAM Global has stated that the scrip offer will be "calculated by reference to the relative NTA [net tangible assets] per share after tax, but before deferred taxes of WAM Global and TGG". The cash offer, should investors choose to take it, will consist of shareholders receiving "cash equal to the NTA per [Templeton] share after all current and deferred taxes and associated transaction costs".

Until the review of an "independent expert" over the deal, Templeton Global Growth Fund's board has given their initial approval. They have told investors that they intend to vote in favour of the merger.

WAM Global founder and chair Geoff Wilson stated the following:

The WAM Global Board of Directors believe that the Scheme will be beneficial to both companies and result in a superior merged entity leveraging Wilson Asset Management's proven investment strategy. We look forward to welcoming TGG shareholders to the Wilson Asset Management family as we continue to grow WAM Global.

WAM Global estimates that if all goes to plan, the merger can be implemented by the end of October 2021.

What would a combined LIC look like?

As we touched on earlier, WAM Global invests in companies mostly outside the ASX and Australia. Its current portfolio (as of 31 May 2021) is weighted 56.4% to US companies, 10.4% to German companies and 7.5% to British shares, amongst others. Some of WAM's top holdings at the current time include Chinese giant Tencent Holdings ADR (OTCMKTS: TCEHY). As well as payments behemoth Visa Inc (NYSE: V) and gaming titan Electronic Arts Inc. (NASDAQ: EA).

Meanwhile, Templeton Global Growth's top holdings (also as of May) include JPMorgan Chase & Co. (NYSE: JPM), Samsung Electronics Co Ltd (OTCMKTS: SSNLF), American Express Company (NYSE: AXP) and Taiwan Semiconductor Mfg. Co. Ltd. (NYSE: TSM). Templeton is also weighted heavily to the USA, which has a 36.9% weighting in the fund. Other significant geographical exposures come from Britain, Germany, Japan and South Korea.

The post WAM Global (ASX:WGB) swallows Templeton in massive ASX merger appeared first on The Motley Fool Australia.

WAM has just released the prospectus for the new LIC, and it makes for some interesting reading. WAM's new Strategic Value LIC (ticker symbol to be WAR) will hit the ASX boards on 25 June. The listing price will be $1.25 a share. This listing price reflects a net asset value backing of $1.25 a share.

According to the prospectus, the company plans to issue between 13.2 million shares and 180 million shares, depending on demand. This will give the new LIC a market capitalisation of $16.5-225 million if all goes to plan.

Not a penny over either – WAM will not accept oversubscriptions. $115 million worth of shares will be earmarked for existing shareholders of WAM's other LICs through a 'priority offer'. Another $10 million worth of shares will be available for past shareholders, WAM subscribers and friends and family of current shareholders.

Prospective shareholders in the initial public offering (IPO) process will have to apply for a minimum parcel of 1,800 shares, worth $2,250.

What will WAM Strategic Value (WAR) invest in?

WAM Strategic Value will be the eighth LIC in the WAM stable. But this new LIC looks to be a rather unique offering. It intends to invest only in other LICs or Listed Investment Trusts (LITs). Specifically those trading at discounts to their net tangible assets. WAM founder Geoff Wilson says that "essentially, we are focused on identifying and investing in $1 of assets for 80c".

The prospectus notes that this has the potential to be a lucrative hunting ground, stating that "the average discount to NTA of the LIC and LIT sector on the ASX was 10.4% as at 31 March 2021. There are currently 80 entities trading at a security price discount to their underlying NTA within the sector".

The new LIC also plans to offer significant diversification benefits. Here are some more details on this matter from the prospectus:

The investment manager will diversify investments within the portfolio so to reduce the company's exposure to abnormal falls in the market price of any single investment.

In addition, the portfolio is expected to provide diversification benefits by virtue of the underlying assets held in LICs and LITs in which the company invests. For example, through an investment in LICs and LITs, the company may have exposure to a portfolio of listed equities, credit, fixed income, infrastructure, private equity, real estate and cash.

Foolish takeaway

WAM has developed a pretty stellar track record when it comes to its LICs. Its oldest company, WAM Capital Ltd (ASX: WAM), has delivered an average return of 16.4% per annum (before fees) since its inception in 1999.

WAM's last IPO of WAM Global Ltd (ASX: WGB) back in 2018 was fully subscribed. So it's likely that we will see significant interest in this latest offering. Let's see how it goes on 25 June.

The post Its WAR! More details of WAM's new listed investment company emerge appeared first on The Motley Fool Australia.

In afternoon trade the fund manager's shares are up 5.5% to a record high of $2.41.

Why is the WAM Global share price at a record high?

Investors have been buying the company's shares following the release of a positive announcement this morning.

That announcement revealed that its global investment fund has been outperforming the MSCI World Index in 2020.

According to the release, at the end of November, the WGB Investment Portfolio had delivered a return of 14.6% in the current financial year.

This compares to a 10.3% return by the MSCI World Index, which represents an outperformance of 4.3% for WAM Global.

What does this mean for dividends?

A lot of investors look to WAM Global and its other funds for a source of income. This is due to their traditionally very generous payouts.

The good news for investors is that FY 2021 will be no different.

The release advises that the WAM Global board intends to pay shareholders a fully franked interim dividend of 5 cents per share. This represents a 66.7% increase on FY 2020's interim dividend.

If you were to annualise this interim dividend, it would mean a fully franked full year dividend of 10 cents per share. Which based on the current WAM Global share price, implies a fully franked 4.15% dividend yield.

The release also revealed that the company currently has 41.9 cents per share in profits reserve. This represents 4.2 year of dividend coverage for shareholders.

Management commented: "The dividend guidance has been made possible by the WAM Global investment portfolio's solid risk-adjusted performance in the financial year to date and the increased profits reserves available."

"The Board notes the share price is currently trading below the net tangible assets (NTA) and believes the clear dividend guidance and the continued strong performance of the investment portfolio will lift the share price to a premium to NTA over time," it concluded.

The post WAM Global (ASX:WGB) share price jumps on dividend guidance appeared first on The Motley Fool Australia.

So that's what we're here for! Every month, WAM puts out a market update discussing the ASX shares its various LICs are buying and selling. Here are some of the shares that WAM's LICs were bullish on (as of 31 October).

WAM's latest ASX share picks

Kicking off with the flagship WAM Capital, and WAM names Nine Entertainment Co Holdings Ltd (ASX: NEC), and Bapcor Ltd (ASX: BAP) as the portfolio's biggest contributors over the month of October. WAM notes that Nine is, in its view, well positioned to "benefit from increased advertising spending in the lead up to the Christmas period" through its various television, streaming, radio and print assets.

Turning to Bapcor, WAM believes the benefits the car parts provider has enjoyed this year will continue. It notes that the company is cashed up and "well placed to make earnings accretive acquisitions".

Some more 'buys'

Bapcor also features in another Wilson LIC's picks for the month: WAM Research Limited (ASX: WAX). According to WAM, WAM Research is also bullish on Bapcor, as well as fitness club operator Viva Leisure Ltd (ASX: VVA). The managers at WAM Research believe Viva is well positioned to benefit from Victoria's easing of lockdown restrictions over the coming months.

WAM's large-cap LIC, WAM Leaders Ltd (ASX: WLE), is focusing on different areas. WAM reports that its favourite ASX shares for the month included BlueScope Steel Limited (ASX: BSL) and Challenger Ltd (ASX: CGF). For BlueScope, WAM expects that global stimulus programs will benefit this steelmaker. Turning to Challenger, WAM is confident this ASX share is undervalued on current pricing. WAM stated "we believe that there is significant value, particularly in the funds management business, that is not appreciated by the market".

My Fool colleague, Tristan Harrison, covered some of WAM Microcap Ltd (ASX: WMI)'s latest picks this morning. But WAM's only internationally-focused LIC, WAM Global Ltd (ASX: WGB), is reportedly bullish on Quanta Services Inc (NYSE: PWR) as well as Avantor Inc (NYSE: AVTR). Quanta is an infrastructure company WAM believes is well-placed to benefit from "grid modernisation, renewables growth and 5G rollout" over in the United States. Meanwhile, WAM sees undervaluation and "additional upside" for Avantor, given the company has opportunities surrounding coronavirus vaccine production.

The post Top fundie, Wilson, names ASX shares to buy appeared first on The Motley Fool Australia.

Why it matters

The leadership of a business are the ones that should be most committed to the cause. At least, that's how I think it should be.

If people decide that they want to sell their shares, that can raise some questions.

But if the management want to buy shares, then that could be a really good indicator of the positive outlook for the company. The idea is that management only buy shares for one reason: they think the share price represents good long-term value.

I like to see management buy shares a similar price to what regular investors can buy shares at on the market.

Insiders have the best knowledge of a company's operations. They are the management of the company. Or perhaps it's directors buying who have excellent knowledge of the business and know the management closely.

I'd actually prefer to see more management buy shares more often. It would be a fair defence to say they shouldn't have all of their financial eggs in one basket, but I think management should show a commitment to the business they're leading. Putting your own money on the line is one of the best ways to align yourselves with the people that you're supposedly running the company for.

Here are some recent positive management movements:

I've been pleased to see pretty hefty purchases of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares by the Millners.

Geoff Wilson has been buying up shares of WAM Global Limited (ASX: WGB) and Wam Alternative Assets Ltd (ASX: WMA).

There have been some insider buys of Transurban Group (ASX: TCL) shares and Nanosonics Ltd (ASX: NAN) shares.

Sales can be a worry

There are lots of different reasons why management apparently choose to sell their shares.

Selling to pay tax is a common reason. Diversifying their portfolio could be a reason. Maybe they need the money to buy a property. Divorce can be a reason.

An ASX share sale can worry investors because it could mean management are deciding to cash out before some bad news is coming.

There have sadly been plenty of examples where management sell and then, a few months later, some bad news is announced. It's not necessarily illegal, it's just not a good look and shareholders may lose confidence in management. A company will sometimes go through tough times, that's understandable, but management shouldn't be bailing out just before the bad news.

But a sale doesn't always mean poor performance

There have been some sales by 'insiders' in recent times in businesses that have gone on to keep growing profit and the share price. A share sale may simply be an honest attempt to diversify.

The leadership of Afterpay Ltd (ASX: APT) and Kogan.com Ltd (ASX: KGN) have previously sold a portion of their shares at a much lower price than today's share prices.

There was a big selldown of Pushpay Holdings Ltd (ASX: PPH) shares not too long ago, but now the Pushpay share price is close to trading at its all-time high.

With the above sales, investors didn't need to worry long-term, partly due to COVID-19 bringing forward digital adoption. 

Foolish takeaway

If you're invested in ASX shares, you want to see that management have skin in the game. Either with a large existing holding or they are purchasing new shares on the market.

Be wary of sales. A sell won't always mean bad news is coming, but I wouldn't exactly call it a positive. However, if a business does drop then it could be good value to buy – that's why I think about the A2 Milk share price. I reckon A2 Milk is a good long-term buy today.

The post Why you should pay attention when management buy (or sell) ASX shares appeared first on The Motley Fool Australia.

2 'bargain buy' ASX shares

Telstra Corporation Ltd (ASX: TLS)

Telstra is our first cheap ASX share to consider today. The Telstra share price has been down-trending for a couple of months now, ever since the company released its FY2020 earnings report back in August. Telstra shares were going for $3.39 the day before these earnings came out. The day after? $3.13. Today, the Telstra share price is just $2.85 (at the time of writing).

Why this sudden drop? Well, Telstra implied in that earnings report that its earnings wouldn't be sufficient to sustain its current 16 cents per share annual dividend in FY2021. As a telco and dividend payer, Telstra is usually sought after by income investors. As such, speculation that a dividend cut is on the cards prompted a lot of selling pressure.

But during the company's annual general meeting last week, Telstra's management appeared to walk away from contemplating a dividend cut, promising investors that, "[Telstra], if necessary is prepared to temporarily exceed our capital management framework principle of paying an ordinary dividend of 70- 90% of underlying earnings to maintain a 16c dividend."

However, since this announcement, the Telstra share price has barely budged. As such, I think this telco is a bargain buy today, especially considering a 16 cents per share dividend would give Telstra shares a fully franked, forward dividend yield of 5.61% on current pricing.

WAM Global Ltd (ASX: WGB)

WAM Global is our second bargain buy today. This company is actually a listed investment company (LIC), which means it acts more like a managed fund than a company — buying and selling shares on behalf of its investors. In WAM Global's case, the company looks for undervalued growth shares from around the world (hence the name). As of 30 September, some of its holdings include Tencent Holdings, Hasbro and Microsoft.

The reason I think WAM Global is an ASX bargain buy today is because, as an LIC, WAM Global publishes the value of its assets every month. And as of 30 September, the company reported that its assets are worth approximately $2.43 a share. That looks pretty good considering the current WAM Global share price is just $2.16 (at the time of writing). That's a 12% discount right there, which isn't a bad deal in today's market.

WAM founder Geoff Wilson clearly thinks so too. ASX records show Mr Wilson has been buying WAM Global shares hand over fist over the past few weeks. You don't often get hints like this in the investing world. As such, I think this company is also a big ASX bargain buy today

The post Here's why I think these 2 ASX shares are bargain buys right now appeared first on The Motley Fool Australia.

Over time it could become one of the most useful ASX dividend shares to own in my opinion.

A quick overview of WAM Global

WAM Global is a listed investment company (LIC) with a focus on international shares. It was set up by Wilson Asset Management (WAM) in June 2018.

The job of a LIC is to invest in other shares which management believe are exciting opportunities.

The WAM investment team have a particular investment style. They try to find undervalued growth businesses where there is a catalyst which could send the company's share price higher.

The lead portfolio manager of WAM Global is Catriona Burns.

Dividend yield and growth

At the current WAM Global share price it has a grossed-up dividend yield of 4.7%. That may not seem that high, but it's the dividend growth that is particularly compelling. The WAM Global board decided to declare a final dividend of 4 cents per share, which was a 100% increase compared to FY19.

I think WAM Global can steadily increase its dividend and yield for investors as it generates returns and builds its profit reserve.

However, I'm not sure that investors can expect WAM Global to have as high of a dividend yield as WAM Capital Limited (ASX: WAM) because international shares obviously don't attach franking credits to their dividends to WAM Global. Besides, not every LIC needs to a have a huge yield – I'd prefer a healthy mix of capital growth and dividends. 

Current investments

ASX shares only represent around 2% of the total global share market. There are plenty of high-quality investment opportunities outside of Australia which WAM Global can give investors access to.

At the end of August 2020, some of its largest investments included: Tencent, Arista, Aon, Avantor, Auto Zone, CME Group, Dollar General, EA, Edwards, Hasbro, Intuit, Lowe's, Microsoft, Nomad Foods, Stroer, Software One and Thermo Fisher Scientific.

As you may be able to tell by the holdings, there is a noticeable weighting to US shares, but that's just where a lot of the global share market is based. Just under two thirds of the portfolio was listed in the US, 7.9% was listed in Germany, 3.4% in Switzerland, 3.3% in the UK, 2.7% in Australia, 2.6% in Hong Kong and 2.1% in Japan with another 9.7% listed elsewhere.

It also had 5.2% of the portfolio as cash, which gives it an opportunity to buy other shares if it sees an opportunity.

Is the WAM Global share price a buy?

Aussies, particularly retirees, may be too focused on ASX shares for their portfolios. Particularly large cap ASX shares. Many of those large ASX names don't offer much growth or global earnings diversification.

WAM Global offers investors a decent starting dividend yield, which is pretty good considering how low interest rates are at the moment.

Over the long-term I think this LIC will be good for dividend income because of the diversification that it offers and its focus on growth.

At the current WAM Global share price it's trading at a 10% discount to the net tangible assets (NTA) at 31 August 2020 of $2.37.

One sign of whether something is a good buy is whether management are buying shares. It was announced today that WAM founder Geoff Wilson AO has bought $383,846 worth of WAM Global shares this week at an average price of $2.12 per share. He actually sold a similar amount of WAM Research Limited (ASX: WAX) shares to fund the acquisition of shares.

If Geoff Wilson thinks that the shares are worth buying this week then I think it's worth paying attention.

I'd be happy to buy a parcel of WAM Global shares and buy more if the discount to the share price widens, or if there is a widespread selloff of global shares.

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So here are 2 ASX shares that I think are striking the right balance with providing both growth and income today.

2 ASX shares I would buy for both growth and income today

WAM Global Ltd (ASX: WGB)

WAM Global is my fist ASX share to buy for growth and income today. This company is a listed investment company (LIC), which means it's really an investment vehicle that buys and sells shares on behalf of its shareholders. In WAM Global's case, this involves scouring the world's share markets for undervalued growth companies. It currently holds a diverse mix of international shares, which include (as of 31 August) Microsoft Corporation (NASDAQ: MSFT), Tencent Holdings Ltd (HKG: 0700), Electronic Arts Inc (NASDAQ: EA) and Hasbro Inc (NASDAQ: HAS).

I like WAM Global as a strong dividend growth share. It only started life back in 2018, but since then, it has rapidly amassed a substantial profit reserve and has begun paying a rapidly-rising stream of fully franked dividends. Its last announced dividend (to be paid on 30 October) will come in at 4 cents per share (cps). That's 33% higher than its 2020 interim dividend of 3 cps and a 100% increase on 2019's final dividend of 2 cps.

That gives WAM Global a trailing dividend yield of 3.33% on current prices, or 3.81% if we annualise the 4 cps dividend. Given this rapid rate of acceleration for this company's payout, I'm very confident that WAM Global will continue to deliver both growth and income well into the future.

CSL Limited (ASX: CSL)

CSL is my second growth and income share to consider today. This company is a healthcare giant and also the largest company on the ASX at the current time. CSL has amassed a reputation as a large-cap growth share for many years now — evidenced by the CSL share price climbing from $88.50 in 2015 to today's share price of $297.55 (at the time of writing).

But while on this growth runway, CSL has also been quietly growing its dividend payouts as well. Its current trailing dividend yield of 0.99% might not sound too exciting. But when you consider that CSL has raised its payouts for 7 consecutive years, including again this year, the picture starts to look more interesting.

And when you see that these increases have taken the CSL dividend from US$1.02 in 2015 to what will be US$2.02 in 2020, it starts to get very exciting. As such, I think CSL is another top ASX share to buy for both growth and income today.

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Well, Blue Sky is about to have a different face as well. It is set to rebrand as WAM Alternative Assets very shortly. So should we pick up shares in Blue Sky before it changes its face? Recent data indicates there might be a decent buying opportunity here.

What is Blue Sky?

The Blue Sky Alternatives Access Fund is a listed investment company (LIC) with something of a sordid past. Its original mandate was a focus on 'alternative assets', which refers to any assets outside the conventional circles of ASX shares, bonds and cash, such as water rights, infrastructure or venture capital. Many investors find these alternative assets attractive due to their low correlation to shares and the prospects of income in our low interest rate world.

However, Blue Sky has been in trouble for a couple of years, ever since a short-seller report exposed alleged problems and overvaluations regarding several of its underlying assets. Receivers were appointed in May 2019 to try and work through these issues, which has led the company into the arms of Wilson Asset Management (WAM).

Enter WAM

WAM is a company that has built a stellar reputation as an LIC manager. It currently offers six different ASX LICs which range from a focus on small or micro-cap ASX shares with WAM Microcap Ltd (ASX: WMI) to international growth companies with WAM Global Ltd (ASX: WGB). Its flagship LIC, WAM Capital Limited (ASX: WAM), has been around since 1999 and has delivered an average return to its investors of 16.1% per annum since (before fees and taxes).

WAM has been courting Blue Sky for a while now, but investors finally gave it the go-ahead for a takeover during an extraordinary general meeting earlier this month. As such, Blue Sky Alternatives Access Fund is set to become WAM Alternative Assets (ticker symbol to be WMA) in the near future (although an exact date has yet to be named). Under the agreement WAM struck with shareholders, the company will guarantee that the new WMA shares will return to being priced in line with its underlying net tangible assets.

Since shares of an LIC are traded in the public market, they can sometimes be priced at a level that is either above or below the value of the underlying assets. And Blue Sky has been underwater for a while now, likely reflecting the uncertainty of its future until recently.

So WAM has promised investors that if the new WMA shares don't trade at a premium to their underlying NTA for no less than one month at least three times during the next five years, shareholders will have the right to terminate the agreement with WAM.

Should investors buy BAF shares today?

So, it looks like Blue Sky has a very promising path back to potential glory. But let's look at the numbers. So, as I mentioned earlier, an LIC often trades at a premium or a discount to its underlying value. Recently (as of yesterday), Blue Sky has notified the markets of its underlying NTA for the month of August. The company advised that each share represented $1.084 in value on a pre-tax basis. At the time of writing, Blue Sky shares are going for 86 cents each. That means you can effectively purchase $1.08 worth of assets for 86 cents today in Blue Sky shares. That's a rough 20% discount to the assets' true value.

As such, I think there is definitely a value case for Blue Sky shares today. WAM is an astute and well-regarded steward of capital that I think can turn around Blue Sky's fortunes under the new name. We have here a compelling long-term value opportunity in my view.

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Yet 2020 has changed that paradigm, perhaps irrevocably. The big four are now offering yields ranging from not-a whole-lot to nothing. Scores of other former dividend heavyweights have slashed and cancelled dividends in 2020 so far. These include Transurban Group (ASX: TCL), Qantas Airways Limited (ASX: QAN) and Ramsay Health Care Limited (ASX: RHC), among others.

So in September 2020, a solid 4% yielder is starting to look pretty dang good. Especially if you consider that interest rates remain at virtually zero. So here are 2 ASX shares offering just that!

2 ASX shares with yields over 4%

1) JB Hi-Fi Ltd (ASX: JBH)

JB Hi-Fi has been one of the surprise performers of 2020. Along with many other ASX retail shares, JB was heavily sold off in the March market crash. But the company's astonishing FY2020 earnings report, in which JB reported a 33% surge in profits, quickly made investors reassess this case. Since 23 March, The JB Hi-Fi share price is up nearly 100%.

But JB is also an underappreciated dividend share as well, in my view. Its FY20 earnings report also included a 76% rise in the company's final dividend over FY19's payout. JB now offers a trailing yield of $1.89, which translates into a 4.02% yield today. If we include JB's full franking, this grosses-up to 5.74%. Not a bad deal in the current environment!

2) WAM Global Ltd (ASX: WGB)

WAM Global is one of my favourite ASX dividend growth shares. This listed investment company (LIC) only started life in 2018. But since then, it has already hit the ground running with its dividends, which have rapidly increased from 2 to 3 to 4 cents per share over the past two years. If we take the last two payouts of 4 and 3 cents per share respectively, we arrive at a trailing dividend yield of 3.33%. WAM Global also provides full franking, so including that the company offers a grossed-up yield of 4.76%.

This LIC invests in a portfolio of global shares. It tends to focus on what it perceives as 'undervalued growth shares'. As of 31 August, some of the holdings in its portfolio include Microsoft Corporation (NASDAQ: MSFT), Hasbro, Inc. (NASDAQ: HAS) and Electronic Arts Inc. (NASDAQ: EA).

If WAM Global can continue to grow its dividend at anywhere near the rate it has managed over the past two years, I think it will be a dividend powerhouse in no time at all. And given the  company has a profit reserve of 32.9 cents per share (as of 31 August), I'm confident it will do so.

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Wilson Asset Management chair Geoff Wilson in an investor call on Friday said the last few months of the ASX have looked "very frothy".

"We could be heading for a lot of pain," he said.

"The way that the market has bounced back [since COVID-19]… people are going to realise that buying shares at doubles or triples, that's not normal."

Wilson's company runs a stable of popular active exchange-traded funds (ETFs), such as WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX) and WAM Global Ltd (ASX: WGB).

Newbie day traders are creating volatility

Wilson blamed a flood of "non-sophisticated money" coming into the market during the virus crisis for the current bubble.

The All Ordinaries Index (ASX: XAO) has surged almost 33% since the depths of the coronavirus crash in March, even after a slight correction in recent days.

Over the long term, the Australian market has historically gained roughly 10% per year, according to Wilson, so he feels it has to eventually reach that equilibrium.

"The market does have a way of cleansing out excesses… we could be getting close to a bit of a cleansing," he said.

"There is a lot of risk in the market at the moment, definitely."

Tech sector is a worry

Technology sector shares were a particular concern to Wilson, who established his LIC company in 1997.

Examples include fintech Afterpay Ltd (ASX: APT), which has shot up more than 700% since March, and Tesla Inc (NASDAQ: TSLA), which surged 470% before a 30% adjustment in recent days.

"That has been looking quite bubbly. I've been thinking back to 1999-2000 when we had the 'tech wreck'," he told investors.

"There wasn't a specific event that created the tech wreck… It was just over-evaluations, then heat coming out of the market."

Wilson predicted that, in a similar fashion, there could be a fresh "wake-up call" coming soon for tech investors.

"There could be a reasonable-sized adjustment."

Wilson Asset Management has more than $3 billion under management on behalf of 86,000 retail shareholders, split across 6 LIC ETF products.

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But there are some shares that are growing their dividend instead. They are rare and may require you to look under rocks that you might not have before. The 2 ASX dividend shares that I've found below are both Listed Investment Companies (LICs), which operate a little differently to normal ASX shares. That's because a LIC is itself an investor of a sort. LICs holds a portfolio of other shares on behalf of their owners. In this way, they can be a useful addition to a dividend portfolio.

1) MFF Capital Investments Ltd (ASX: MFF)

MFF Capital is a LIC that used to be part of the Magellan Financial Group Ltd (ASX: MFG). Even though MFF and Magellan have gone their separate ways to some extent, Magellan co-founder Chris Mackay remains MFF's chief portfolio manager. Mr Mackay is regarded as one of the best fund managers in the country. MFF holds a portfolio of mostly US-based shares. Its top holdings are payment giants Visa and Mastercard, as well as Microsoft and Warren Buffett's Berkshire Hathaway. It also has a sizeable cash position as of 28 August of 37.6%.

MFF is also a solid dividend payer. It has just announced a 3 cents per share fully franked final dividend, which was up from February's 2.5 cents per share interim payout and gives the company an annualised yield of 2.25%. Further, the company has just announced that it intends to increase its biannual dividends to 5 cents per share over the next 3 years. That would equate to a 3.76% annualised yield on today's prices.

2) WAM Global Ltd (ASX: WGB)

WAM Global is another internationally-focused LIC with a strong track record of dividend growth. This LIC also invests is US shares, as well as holdings from Europe, China and the United Kingdom. Some of its top holdings include Tencent Holdings, EA Games, Microsoft and Nomad Foods, as well as a 5.9% cash position. It's run by the reputable Wilson Asset Management, which has developed a strong track record with its 20-year history of running LICs.

WAM Global has recently declared a fully franked final dividend of 4 cents per share, which doubled FY19's final payout of 2 cents per share. That gives WAM Global an annualised trailing yield of 3.74% on current prices. The company has a profit reserve of 30.1 cents a share as well, so I think this dividend is well covered and sustainable. If this dividend growth continues at this rate (likely in my view due to the fat profit reserve), I expect WAM Global to be a top yielding ASX dividend growth share in just a few years.

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2020 has been a tough year for dividend shares in particular, with the ASX banks and other former dividend stars forced to cut their payouts, sometimes substantially. Therefore, I think finding the companies that can grow as well as fund a growing dividend is especially important this year. So here are 2 shares that I think fall into this category, and are (in my view) primed to provide shareholders with both growth and income well into the future.

1) CSL Limited (ASX: CSL)

Backtrack to last year and CSL shares were the talk of the town. The CSL share price rose almost 50% in 2019 alone and made a new all-time high of $342.75 earlier this year. But since then, CSL has drifted off the radar for many ASX investors. Evident by how CSL shares have been stuck in a rut since May. Today's share price of $287.50 (at the time of writing) is pretty much where CSL shares were at the start of the year. Even the company's impressive FY2020 earnings report wasn't enough to pull CSL shares out of this rut for long. But that's why I think CSL could be a great buying opportunity today for both growth and income.

Despite its massive size, CSL told investors it expected revenue growth of 8-10% over Fy2021. And CSL has recently bumped up its final dividend by 17%, which continues a long track record of dividend growth. I fully expect these trends to continue over the next few years at least. Thus, I think CSL is a top ASX share for growth and income today.

2) WAM Global Ltd (ASX: WGB)

WAM Global is a Listed Investment Company (LIC) that focuses on buying internationally-listed growth shares. It only started life back in 2018, but since then has developed a strong track record of paying dividends. The company's modus operandi involved buying internationally-listed growth shares which its management believe are poised to benefit from a pricing catalyst. Some of its current top holdings (as of 31 July) include Microsoft, Tencent Holdings, Intuit and EA Games. When this catalyst is realised, the shares are sold and profits banked. Dividends are then paid out of this profit reserve.

WAM Global recently announced a 4 cents per share final dividend, which was a 100% increase from FY19's final payout. If the company keeps this divided growth rate up, it will be a highly lucrative income share to own in just a few years. This is likely in my view as well, seeing as the company currently has a profit reserve of 30.1 cents per share. Thus, I think it's another top pick for both growth and income today.

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Some ASX shares are known for growth like Xero Limited (ASX: XRO). Others are known for income such as Telstra Corporation Ltd (ASX: TLS). But there aren't many businesses offering a good mix of both.

Here are two ASX shares I'd buy that offer a mix of income and growth:

Citadel Group Ltd (ASX: CGL)

I think that Citadel is a very compelling ASX share with good growth potential.

The FY20 result was announced today. The statutory result was a little messy with a few 'significant items' which included costs relating to the Wellbeing acquisition. When looking at the underlying result, Citadel had a strong year with revenue growth of 29.4%, gross profit growth of 24% and earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 25.3%. I think these were solid numbers. 

FY21 is set up to be a strong year with a full year contribution from Wellbeing, a UK health software business. Not only is there at least $1.5 million of annualised cost savings from a synergy program, but there is a number of good cross-selling opportunities. Citadel says that the majority of health software has recurring revenue – around 77% – and it is at a high margin (approximately 79%).

I'm excited by the prospect of the company expanding in several different sectors such as construction, local government and health. The ASX share revealed that it has a "strong" merger and acquisition pipeline focused on scalable software opportunities that build on existing capabilities.

The Citadel board declared an annual dividend of 10.8 cents per share for FY20. At the current Citadel share price that equates to a grossed-up dividend yield of 3.4%. As profit grows the company will be able to grow its dividend whilst also investing for growth.

I think the Wellbeing acquisition is transformational for Citadel. The Citadel share price is currently trading at under 14x FY22's estimated earnings. Compared to plenty of other ASX tech shares, I think this is attractive value.

WAM Global Limited (ASX: WGB)

WAM Global is a listed investment company (LIC) that is operated by the high-performing outfit, Wilson Asset Management.

The idea behind WAM Global is to bring the investment strategy that has worked well for WAM Capital Limited (ASX: WAM) to the global share market. So it's aiming for undervalued global growth companies.

WAM Global sometimes goes for smaller businesses than some other globally-focused Australian fund managers may go for.

At 31 July 2020, some of its biggest holdings included: CME Group, Electronic Arts, Hello Fresh, Hasbro, Edwards and Dollar General. However, it also owns some larger businesses like Tencent, Microsoft and Lowe's. These are high quality ideas. 

Over FY20, the WAM Global portfolio's gross return was 3.1%, outperforming the MSCI World SMID Cap Index in AUD terms by 5%. Over the longer-term I expect WAM Global will be able to produce solid gross returns.

As a LIC, WAM Global can generate investment returns. It can then steadily pay out some of that profit as a smoothed dividend for shareholders.

The ASX share grew its FY20 final dividend by 100% to 4 cents per share, bringing the full year dividend to 7 cents per share. This is more than I was expecting, I was only thinking it would be 6 cents per share.

WAM Global had a profit reserve of 30.1 cents at 31 July 2020. This is 4.3 years of dividend coverage for shareholders.

At the current WAM Global share price it has a grossed-up dividend yield of 4.6% and it's trading at a 6% discount to the net tangible assets (NTA) per share at 31 July 2020.

Foolish takeaway

I think both of these ASX shares offer an attractive combination of potential growth and income despite global COVID-19 impacts. I think WAM Global will be a pleasing ASX dividend share. Citadel has plenty of capital growth potential in my opinion. I think Citadel will produce the stronger total returns over the next five years, so it would be the one I'd pick with a decent starting dividend.

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