These dividend shares offer investors attractive yields…
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Are you looking to add some dividend shares to your portfolio? Then take a look at the ones listed below.
Here’s why they could be top options for income investors this week:
Fortescue Metals Group Limited (ASX: FMG)
Fortescue is one of the world’s leading iron ore producers and is benefiting greatly from the sky high prices being commanded by the steel making ingredient.
At present, the spot iron ore price is trading at ~US$220 a tonne. And even though Fortescue’s lower grade ore doesn’t command as high a price as that, it is still receiving significantly more than its costs per tonne. This means Fortescue is generating material free cash flow right now. And given management’s penchant for returning funds to shareholders, this bodes well for dividends in the near term.
According to a note out of Macquarie from last week, the broker expects Fortescue to pay dividends of $3.40 per share in FY 2021 and then $2.43 per share in FY 2022. Based on the latest Fortescue share price of $23.22, this will mean fully franked yields of 14.6% and 10.5%, respectively.
Macquarie has an outperform rating and $27.00 price target on the miner’s shares.
Wesfarmers Ltd (ASX: WES)
Another option to consider is Wesfarmers. This conglomerate has been performing very positively in FY 2021 thanks to solid growth across the majority of its businesses.
The star of the show has been the key Bunnings business. The hardware giant has been benefiting from home improvement-related government stimulus and the booming housing market. This led to Bunnings reporting a 35.8% increase in earnings before interest and tax (EBIT) to $1,274 million. This represents 62% of Wesfarmers’ EBIT of $2,058 million for the half.
Macquarie is also a fan of Wesfarmers and currently has an outperform rating and $58.12 price target on its shares.
The broker is forecasting fully franked dividends of $1.74 per share in FY 2021 and $1.76 per share in FY 2022. Based on the latest Wesfarmers share price of $55.00, this represents attractive yields of 3.15% and 3.2%, respectively.
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Returns As of 15th February 2021
James Mickleboro does not own any shares mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.