WAM Research Limited (ASX: WAX) is one of the high-performing listed investment companies (LICs) operated by the team at Wilson Asset Management.
Earlier today, WAM Research revealed a 42.2% increase of the operating profit before tax to $28.9 million.
WAM Research reported that FY18 dividends totalled 9.5 cents per share, a pleasing 5.6% increased compared to FY17.
The WAM Research portfolio created a gross return of 14.5% before expenses and fees, compared to the S&P/ASX All Ordinaries Accumulation Index's return of 13.7%. This outperformance was achieved with an average cash weighting of 29.1%.
The before-tax NTA increased by 11.7% during FY18, including the 9.25 cents per share of dividends paid to shareholders. The NTA increase includes the 1.7% paid for corporate tax, 1% of management fees and other items.
WAM Research's total shareholder return was 6.6% which was driven by the portfolio performance but hampered by the reduction in the premium to the NTA which fell from 22.4% in 2017 to 18% at the end of FY18.
Three of the LIC's best performing holdings were Afterpay Touch Group Ltd (ASX: APT), Emeco Holdings Limited (ASX: EHL) and Bravura Solutions Ltd (ASX: BVS).
At 30 June 2018, WAM Research's five largest holdings were Nine Entertainment Co Holdings Ltd (ASX: NEC), Flight Centre Travel Group Ltd (ASX: FLT), PSC Insurance Group Ltd (ASX: PSI), Emeco Holdings Limited (ASX: EHL) and FlexiGroup Limited (ASX: FXL).
The WAM Research team remain cautious with the rise in global interest rates, coupled with the potential of trade wars. Although global economic growth continues, WAM believes volatility will increase. WAM Research started FY19 with 25.6% of the portfolio in cash.
Foolish takeaway
WAM Research currently has a grossed-up dividend yield of 8.3% and it has increased its dividend each year since the GFC, not many shares on the ASX have that record. In my opinion WAM Research is one of the best dividend shares on the ASX.
Whilst the current yield is very attractive I think it might be wise to wait until the final dividend has been paid in a couple of months due to the current 26% premium to July 2018's pre-tax NTA. Waiting should present a better price and starting yield to patient investors.
