WAM Capital Limited (ASX:WAM) announced its FY2026 final Dividend and FY2027 dividend update on 28 August 2026. The Board declared a final dividend of 7.75 cents per share, partially franked at 60%, which brings the FY2026 full year dividend to 15.5 cents per share, partially franked at 60%. The company said its listed Investment company structure and accumulated profits reserve allowed it to maintain the dividend.

For FY2027, however, the Board set a full year dividend target of 8.0 cents per share, made up of an Interim Dividend of 4.0 cents and a final dividend of 4.0 cents, again expected to be partially franked at 60%. The company reported a share price of $1.485 and a pre-tax Net Tangible Assets (NTA) figure of $1.22 per share at 30 June 2026.

WAM Capital is a listed investment company managed by Wilson Asset Management, listed in August 1999. Its objectives are to deliver a stream of fully franked dividends, provide capital growth and preserve capital through an actively managed portfolio of undervalued growth companies listed on the ASX, with a focus on small-to-medium sized businesses.

Since inception in August 1999, the company reports that its investment portfolio has delivered 14.5% per annum, ahead of the S&P/ASX All Ordinaries Accumulation index by 6.0% per annum, and that shareholders received more than $1.48 per share in dividends including franking credits between FY2020 and FY2026.

Recent Development

The 28 August 2026 announcement explained the reason for the lower target. Since FY2020 the company has maintained its full year dividend at 15.5 cents per share, and dividends paid exceeded profits generated, drawing on the accumulated profits reserve. After payment of the FY2026 final dividend the profits reserve will be 5.6 cents per share, which is less than the 7.75 cents per share needed to pay an FY2027 interim dividend at the current level. Chairman Geoff Wilson AO said maintaining 15.5 cents is no longer sustainable with the reserve available, and that the lower target is intended to rebuild the reserve and preserve the capital base.

Based on portfolio performance to 27 August 2026, the profits reserve is expected to rise by about 1.3 cents per share, providing about 6.9 cents per share for future dividends. The company noted the FY2027 target is not a forecast or commitment. Based on the 31 July 2026 pre-tax NTA of $1.2117 per share, the target represents a Dividend Yield of 6.6% and a grossed-up yield of 8.3%.

For the year to 30 June 2026, WAM Capital reported an operating loss before tax of $186.7 million, compared with an operating profit before tax of $304.0 million a year earlier, and an operating loss after tax of $125.9 million, compared with an operating profit after tax of $219.6 million. The investment portfolio declined 10.5% in FY2026, against gains of 5.7% for the S&P/ASX All Ordinaries Accumulation Index and 8.1% for the S&P/ASX Small Ordinaries Accumulation Index.

The final dividend has an ex-dividend date of 8 October 2026, a Record Date of 9 October 2026 and a payment date of 21 October 2026. The Dividend reinvestment Plan operates at a 2.5% discount, with the last election date on 13 October 2026.

Sector Context

WAM Capital said the year was affected by sector positioning, stock selection and the broader macroeconomic backdrop. Consumer Discretionary holdings weighed on returns as higher than expected interest rates pressured the sector, while investor capital concentrated in artificial intelligence beneficiaries and liquid large-cap companies, which contributed to lower valuation multiples for many small and mid-cap technology, software and service companies in the portfolio.

Lead Portfolio Manager Oscar Oberg said investor preference for larger companies and resource-related exposures created a headwind for small-cap industrial companies, and that company-specific events at Corporate Travel Management (ASX:CTD) and Tuas (ASX:TUA) detracted from performance. He said turning points in the Interest Rate cycle have historically been a catalyst for smaller companies and that the Reserve Bank of Australia is nearing the end of its tightening cycle.

Risks and Uncertainties

The FY2027 target depends on portfolio performance. The company said it needs to generate additional profits through positive investment performance in FY2027 to declare both the interim and final dividends in line with the target, and that the target is not a forecast or commitment. The level of franking will depend on franking credits generated through tax paid on realised profits and franked dividends received.

Longer-term performance figures also show a mixed picture. The portfolio returned 11.4% a year over three years, 5.8% over five years, 8.5% over seven years and 8.8% over ten years, compared with All Ordinaries Accumulation Index returns of 10.4%, 7.4%, 8.1% and 9.5%, so the portfolio trailed the index over five and ten years while leading over three and seven years. Performance figures are before expenses, fees, taxes and capital management initiatives. The portfolio held 11.5% in cash at 30 June 2026.

What to Watch Ahead

WAM Capital scheduled a results and dividend question and answer webinar for 2 September 2026 at 2:00pm Sydney time, featuring Geoff Wilson AO and Oscar Oberg. Investors can also follow the payment of the final dividend on 21 October 2026, the and the declaration of the 4.0 cent FY2027 interim dividend.

Other reference points include the size of the profits reserve, which was 5.6 cents per share after the final dividend and about 6.9 cents on the company's 27 August 2026 estimate, the recovery of the small-cap segment and updates on portfolio positioning, with industrials at 18.0%, information technology at 12.4% and financials at 11.8% at 30 June 2026.

The company's top holdings at 30 June 2026 included Artrya (2.5%), Firmus Technologies (2.4%), GemLife Communities Group (2.2%) and Aussie Broadband (2.2%), and 46.1% of the portfolio was in ASX 101-300 companies while 29.4% was outside the ASX 300.

The Bottom Line

WAM Capital's update maintained the FY2026 dividend at 15.5 cents per share but set an FY2027 target of 8.0 cents per share after a 10.5% portfolio decline and a reduced profits reserve. Portfolio performance and the reserve are the next reference points.