This could be a great time to start buying shares that have been sold off because of the coronavirus outbreak fear.
Some shares have been sold off more than others, such as listed investment companies (LICs). Not only are the underlying shares being sold off but discounts to net tangible assets (NTA) are widening, or premiums are reducing. What does that mean? It means you can buy $1 of shares for less than a dollar, and the discount is widening.
So, what dividend share now looks good value? There are several, but here's one with a huge dividend yield:
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a LIC run by Wilson Asset Management which largely focuses on investing in the large caps on the ASX.
At the end of February 2020 it had a NTA per share, which is the underlying value, of $1.23, which compares to the current share price of $1.015, a discount of 17.5% – the discount may be lower as the share market has fallen further since the end of February 2020, but it's certainly a cheap price.
It owns plenty of Australia's largest businesses such as Amcor Plc (ASX: AMC), CSL Limited (ASX: CSL), Fortescue Metals Group Limited (ASX: FMG), Telstra Corporation Ltd (ASX: TLS) and Woolworths Group Ltd (ASX: WOW).
Since inception to February 2020, the S&P/ASX 200 Accumulation Index has returned 9.6% per annum and WAM Leaders' gross return has been 11.3% per annum, which excludes fees, expenses and taxes.
The great thing about LICs is that they can turn both capital gains and dividends received from their holdings into stable dividends for their own shareholders. WAM LICs like most of their delivered return to be dividends.
What about the dividend?
WAM Leaders has grown its dividend each year since FY17 and currently offers an annualised grossed-up dividend yield of 9.1%.
As long as WAM Leaders has a decent profit reserve it can keep paying its dividend.
When the share market stops falling there could be a strong recovery when investors realise the worst is over.
Investing in WAM Leaders would give income-seekers a solid long-term yield at today's price (even if there was a reduction to say 7%) and the discount to its NTA now looks very attractive.
