I’m calling both of these ASX dividend shares buys because of their ability to pay large dividends and the relatively attractive price they’re trading at.
Dividends aren’t the only things worth investing for – ideally, we’d like to see capital growth with (strong) dividends.
I’m not expecting a lot of share price growth from the below two names, but I like the diversification and dividends on offer.
WAM Microcap Limited (ASX: WMI)
This is a listed investment company (LIC) which focuses on small ASX shares (with market caps under $300 million), which can usually produce a lot of growth because small cap stocks are typically undervalued and at a faster-growth stage of their lives.
The WAM Microcap investment portfolio has delivered an average return per annum of 15.5% since inception in June 2017, though this figure is before expenses, fees and taxes.
This level of a return allows the LIC to pay a high level of dividend and still achieve a small amount of capital growth over time, though small caps can be very volatile, as we’ve seen over the past four and a half years.
The WAM Microcap share price is currently trading at close to its underlying asset value, the pre-tax net tangible assets (NTA), which I think is an appealing price to buy at. With the current level of annual dividends, the ASX dividend share has a dividend yield of 10.7% including franking credits.
WCM Global Growth Ltd (ASX: WQG)
This is another LIC, it aims to invest between 20 to 40 global shares which have appealing internal financial metrics and have corporate cultures that support the ongoing improvement of the companies’ competitive advantages.
Some of the current businesses in the portfolio include Novo Nordisk, Amazon, General Electric, Nvidia, 3i, Microsoft and Intuitive Surgical.
Since the ASX dividend share’s inception in June 2017, the WQG portfolio has delivered an average return per annum of 14.5%, which is after investment management and performance fees, but before expenses and taxes. Therefore, its gross performance has been stronger than WAM Microcap’s.
Its aim is to progressively grow its dividend, which it has done so over the last few years. Over the next 12 months, it’s expecting to pay dividends that equate to a dividend yield of 6.5% excluding franking credits. The WQG share price is at a 12% discount to the latest weekly underlying value update, the pre-tax NTA, as of 21 June 2024.
