ASX dividend share WAM Leaders Ltd (ASX:WLE) has just announced guidance for a 2021 interim payout. Are WLE shares a buy today?
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ASX dividend share and listed investment company (LIC) WAM Leaders Ltd (ASX: WLE) has only been around since 2016. But since that time, this LIC has quickly developed a robust reputation as a solid ASX dividend share delivering income for its investors. In a year that has seen absolute carnage on the ASX dividend landscape, this has been a welcome oasis.
The company has already announced two dividend payments for its shareholders this year — an interim dividend of 3.25 cents per share (cps) that was paid out in April, and a 3.25 cps final dividend that will hit investors’ bank accounts on 30 October.
That gives WAM Leaders shares an expected yield for 2020 of 5.51% (or 7.87% grossed-up with WAM Leaders’ full franking).
But today, WAM Leaders has gone one step further and issued guidance for its upcoming dividends in 2021. According to an ASX announcement today, the company’s management is flagging that, for the 2021 calendar year, the company will be paying an interim dividend of 3.5 cps, which would be a 7.7% increase on 2020’s interim (and final) payout.
However, WAM Leaders notes that this guidance is “subject to no material change in market conditions”, so don’t go out and book a holiday just yet. According to the company, WAM Leaders has made this (rather unusual) announcement partly “in response to shareholders’ enquiries” and partly to “provide clarity to all shareholders participating in the share purchase plan”.
If WAM Leaders pays out two dividends of 3.5 cps each next year, it would give the shares a forward dividend yield of 5.93% on current pricing (8.47% grossed-up).
Is WAM Leaders a buy today for dividend income?
As an LIC, WAM Leaders has the advantage of being able to hoard profits so it can pay a smooth dividend over time. The company tells us that it has enough cash in its profit reserve to fund dividends for at least the next 2.6 years, which I think is attractive in a year that has seen many dividends dry up on the ASX.
Looking at WAM Leaders’ investment portfolio, I think this is a good option for anyone who wants exposure to the ASX’s largest companies and who appreciates a hefty dividend. As of 31 August, WAM Leaders’ top holdings include CSL Limited (ASX: CSL), BHP Group Ltd (ASX: BHP) and Goodman Group (ASX: GMG).
As such, I think this LIC is a solid investment for income-seeking investors. The 2021 dividend guidance is a great move to give investors certainty and flags (in my opinion) that this company will continue to be a hefty income-generating investment well into the future.
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Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.