
The ASX dividend stock WCM Quality Global Growth Fund (ASX: WCMQ) has dropped around 4% since mid-January, as the chart below shows. There are a few reasons I think the investment is a top buy for passive income today, even though the decline isn’t large.
This is an exchange-traded fund (ETF) that is operated by the investment team at WCM Investment Management. WCM is based in Laguna Beach, Southern California. On its choice of location, the fund manager says:
We are conveniently located 2,805 miles from the groupthink of Wall Street.
There are a couple of key reasons why I think this is a compelling ASX dividend stock after its small decline.
Excellent investment strategy
The fund aims to own between 20 and 40 stocks that it views as quality global growth companies.
Its strategy prioritises companies with a durable and improving competitive advantage (meaning a positive trajectory of the economic moat).
The investment team believes that the corporate culture has a critical role in driving shareholder value and ensuring ongoing improvement of the economic moat.
It aims to maintain a focused portfolio of high-conviction holdings it believes can deliver strong investment returns.
Finally, WCM says that thoughtful portfolio construction “enhances the potential for robust performance in different market backdrops”.
By following this strategy, the WCMQ ETF’s portfolio has delivered an average net return of 15.9% per year since it started in August 2018, outperforming the global share market by an average of 2.8% per year during that time.
Some of the names in its current portfolio include AppLovin, Taiwan Semiconductor, Amazon, Rolls Royce and Tencent.
Why it’s a strong ASX dividend stock pick
I haven’t mentioned anything about its passive income potential yet, so let’s look at that aspect.
The fund has a specified target of delivering a minimum annualised cash yield of 5% per year.
I’d suggest that this immediately makes the fund attractive as a dividend investment.
Past performance is not a guarantee of future outcomes, in terms of the fund’s net returns. However, it does have a good track record of delivering long-term double-digit returns that I think can be continued.
The level of net returns the fund is producing means it can pay a 5% dividend yield and see the capital value of the fund increase over time. A higher unit price means a higher future payout in the coming year.
For example, a 5% dividend yield on a $10 unit price is a 50 cents per unit payout. If the unit price grows to $11 then the next payout would rise to 55 cents per unit.
I’m optimistic that the WCMQ can deliver a good dividend yield, growing payouts and capital growth in the coming years.
The post 1 ASX dividend stock down 4% I’d buy right now! appeared first on The Motley Fool Australia.
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More reading
- 3 wonderful ASX dividend shares I’d buy with $3,000 right now
- Here’s how you could turn the stock market into a $1,000 monthly passive income machine
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Amazon, Taiwan Semiconductor Manufacturing, and Tencent. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Rolls-Royce Plc. The Motley Fool Australia has recommended Amazon. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.








