WAM Capital, a listed investment company (LIC) that manages investments primarily in small-cap companies listed on the ASX, aiming to provide returns to shareholders, has significantly cut its dividend target. The firm shocked shareholders by nearly halving its annual dividend target for the 2027 financial year to 8¢ a share, down from a consistent 15.5¢. This announcement on Friday sent WAM Capital’s stock price plunging 18.5 per cent, reaching a 16-year low of $1.23. For over five years, investors had relied on the steady payout, a practice that chairman Geoff Wilson later admitted was unsustainable.
During a webinar, Mr Wilson explained that the board had kept the dividend “too high” in recent years, exceeding the profits generated by the LIC. This strategy forced WAM Capital to draw heavily on its profit reserves, shrinking the capital pool to unsustainable levels. He conceded, “we probably should have cut the dividend earlier.” The dividend reduction follows a challenging period for WAM Capital’s investment portfolio, which saw a 10.5 per cent decline in the 2026 financial year, underperforming its S&P/ASX Small Ordinaries Accumulation Index benchmark by 18.6 per cent. The LIC reported a $125.9 million operating loss after tax for the year ending June 30, contrasting sharply with the prior year’s $219.6 million profit.
Lead portfolio manager Oscar Oberg acknowledged the difficult year, attributing underperformance partly to a sell-off in consumer discretionary and small-cap technology stocks, alongside exposure to companies like Corporate Travel and Tuas facing specific issues. Shareholders voiced concerns regarding performance fees, WAM’s focus across multiple LICs, and the abrupt dividend cut. Mr Wilson attempted to restore confidence by purchasing approximately $313,250 worth of stock, with former chief executive Kate Thorley also buying shares. However, the stock closed at $1.24 on Wednesday, reflecting ongoing investor unease. Mr Wilson assured investors the revised dividend target would not impact WAM’s other LICs.
