WAM Leaders Boosts Fully Franked Interim Dividend Amid Strong Profit Surge
WAM Leaders Limited has announced a 4.7 cents per share fully franked interim dividend, reflecting a 7.4% annualised yield, supported by a 185% jump in operating profit. The company’s disciplined sector positioning and robust portfolio performance underpin continued dividend growth since inception.
- Interim dividend increased to 4.7 cents per share, fully franked
- Operating profit before tax surged 184.7% to $48 million
- Investment portfolio delivered 12.2% p.a. return since May 2016 inception
- Portfolio underweight banking sector, overweight resources and consumer staples
- Dividend coverage stands at 3.1 years, with strong franking credits
Dividend Increase Reflects Strong Portfolio Performance
WAM Leaders Limited (ASX: WLE) has declared a fully franked interim dividend of 4.7 cents per share, marking another increase in its annual dividend payout. This translates to an annualised fully franked dividend yield of 7.4%, well above the yield on the S&P/ASX 200 Accumulation Index. The dividend announcement follows a remarkable 184.7% rise in operating profit before tax to $48 million for the half-year ending 31 December 2024.
Chairman Geoff Wilson AO highlighted that the company has consistently increased dividends every year since its May 2016 listing, supported by an investment portfolio that has delivered an average annual return of 12.2% since inception. This steady growth has allowed WAM Leaders to maintain a dividend coverage ratio equivalent to 3.1 years, underscoring the sustainability of its distributions.
Strategic Sector Positioning Drives Performance
The portfolio’s 3.3% increase over the half-year, while lagging the S&P/ASX 200 Accumulation Index’s 6.9% gain, reflects a deliberate underweight stance in the banking sector. Lead Portfolio Manager Matthew Haupt explained that this positioning is a result of disciplined risk management, favouring sectors with more attractive valuations and growth prospects.
WAM Leaders holds overweight positions in materials, consumer staples, and communication services, with key holdings including Rio Tinto, BHP, and Treasury Wine Estates. The investment team anticipates that upcoming stimulus measures in China, expected to be announced at the National People’s Congress in March, will boost demand for commodities and consumer products, benefiting these sectors.
Balancing Risk and Opportunity Amid Market Dynamics
While the portfolio’s strategic underweight in Australian banks and a reduced position in The Star Entertainment Group impacted short-term performance, the management team remains confident in the portfolio’s long-term value potential. The company’s focus on capital preservation and identifying companies with strong fundamentals and macroeconomic catalysts continues to guide its investment approach.
Over five years, WAM Leaders has outperformed the S&P/ASX 200 Accumulation Index by 3.7% per annum, reinforcing the effectiveness of its active management strategy. The portfolio maintains an average cash holding of around 10%, providing flexibility to capitalize on emerging opportunities.
Looking Ahead
WAM Leaders’ upcoming Q&A webinar on 7 March 2025 will offer investors further insights into portfolio strategy and outlook. With a strong balance sheet, growing profits, and a commitment to increasing fully franked dividends, WAM Leaders is positioning itself to navigate evolving market conditions while delivering consistent returns to shareholders.
Bottom Line?
WAM Leaders’ dividend growth and profit surge underscore its disciplined strategy, but sector bets and market shifts warrant close investor attention.
Questions in the middle?
- How will China’s stimulus measures concretely impact WAM Leaders’ resource and consumer staples holdings?
- Can the portfolio’s underweight banking stance sustain outperformance if financials rebound?
- What risks might arise from the portfolio’s concentrated sector exposures amid global volatility?
