WAM Capital Limited (ASX: WAM) is one of the largest listed investment companies (LICs) on the ASX.
It's run by Geoff Wilson and his investment team at Wilson Asset Management. It's the longest running LIC in the Wilson stable, but that doesn't mean it should be last on your WAM shopping list.
Here's three reasons why I think it's a great dividend pick:
Big and growing dividend
A dividend share obviously must have a decent dividend yield. WAM Capital doesn't disappoint on this front, it currently has a trailing grossed-up dividend yield of 9%.
The dividend has grown every year since the GFC, however the growth rate may continue to slow down because there's only 1.1 years of profit reserves in the tank according to the latest WAM presentation.
Strong outperformance
The reason why WAM is able to pay such a good dividend is because the investment team have consistently outperformed the market.
Over the last year, three years and five years the average return per annum has been 8.9%, 16.4% and 17.4% respectively.
If WAM Capital can keep outperforming the market then it will continue growing the dividend and NTA nicely for shareholders.
Not a typical LIC
Most LICs will typically just buy and sell shares, with a few using options to hopefully boost returns.
However, WAM Capital isn't afraid to make use of its size, connections and skill to do things most other investors can't or don't.
It recently proposed an off-market takeover for Molopo Energy Limited (ASX: MPO). In April 2017 it bought an unlisted investment company, the WAM Capital board look forward to making similar transactions like this in the future.
If it continues making strategic moves like this, then it can keep generating opportunities that simply aren't accessible for the rest of the market.
Foolish takeaway
I would much prefer to buy shares of WAM Capital over LICs like Argo Investments Limited (ASX: ARG) that focus on large caps, simply because WAM Capital is much more likely to deliver market-beating returns for shareholders.
