Could WAM Capital Ltd (ASX: WAM) be a reliable long term ASX 200 dividend share you can hold into retirement?
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What does WAM do?
WAM is a listed investment company (LIC) which provides investors exposure to an actively managed portfolio of undervalued growth companies listed on the ASX. The company’s investment objectives are to deliver investors a steady stream of fully franked dividend, provide capital growth and preserve capital.
A consistent ASX 200 dividend share
Since the company’s inception in August 1999, it has paid a total of 246.25 cents per share in fully franked dividends to shareholders. WAM has more than a decade of steadily increasing fully franked dividends paid out to investors.
The company’s FY20 dividend of 15.5 cents would represent a yield of 6.75% at today’s prices. Its history of increasing dividends combined with a market leading yield could make it one of the best ASX 200 shares for sustainable dividends.
In FY20 WAM delivered an investment portfolio outperformance of 4.4% to shareholders during the highly volatile 12-month period to 30 June 2020. The WAM share price is also down 2% in 2020 compared to the 11% fall of the ASX200.
A versatile portfolio
As the coronavirus spread in February 2020, WAM swiftly reduced its exposure to less liquid small-cap companies that had performed strongly over the prior 12-24 months, as well as indebted and cyclical companies. In February, the company increased its cash weightings from 13.7% to 23.2% and further increased its cash holdings to 37.9% in March.
As the market started to recover in April, WAM found much success in companies such as BWX Ltd (ASX: BWX), Flight Centre Travel Group Ltd (ASX: FLT) and A2 Milk Company Ltd (ASX: A2M). While the market was still in a vulnerable state, WAM approached it with confidence in selecting opportunities in companies with strong industry positions, balance sheets and earnings growth.
In the company’s most recent portfolio update, it cited that August had been the best reporting season in the company’s history. Significant contributors to the investment portfolio outperformance included research driven holdings in communications technology company Codan Limited (ASX: CDA) and medical imaging services company Integral Diagnostics Ltd (ASX: IDX).
WAM could be one of the best ASX200 dividend shares given its history of dividends. Its proven investment philosophy does all the hard yards for investors with portfolio conservatism and aggression where appropriate.
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Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended BWX Limited. The Motley Fool Australia owns shares of A2 Milk. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. 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.
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