There are some ASX dividend shares with yields of more than 4%. One of those ideas is farmland REIT Rural Funds Group (ASX:RFF).
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There are some ASX dividend shares out there with yields of more than 4%.
The official Reserve Bank of Australia (RBA) interest rate is now just 0.25%, which impacts the savings rates on bank accounts.
Here are some examples of businesses that have dividend yields of more than 4%:
Rural Funds Group (ASX: RFF)
Rural Funds is an agricultural real estate investment trust (REIT) which owns a portfolio of different farm properties including cattle, almonds, macadamias, vineyards and cropping (cotton and sugar). It has a total of 61 properties with a weighted average lease expiry (WALE) of 10.9 years.
The ASX dividend share aims to grow its distribution by 4% per annum for investors. The REIT plans to turn to some cattle and sugar cane properties to macadamias, a higher and better use. Planting 5,000 hectares of macadamias will take approximately five years. Discussions for the lessees for the orchards is ongoing. The business said that it has the capacity to fund the initial macadamia developments while importantly continuing to fund unitholder distributions.
Rural Funds has provided guidance that the distribution will be higher by 4% to 11.28 cents per unit in FY21.
At the current Rural Funds share price of $2.57, this equates to a distribution yield of 4.4%. However, the adjusted net asset value (NAV) per Rural Funds unit is $1.94. The pro forma gearing is 28.3%.
Brickworks Limited (ASX: BKW)
Brickworks is a diversified ASX dividend share with multiple exposures to the real estate industry.
It’s well known for its building products divisions. It manufactures and sells a variety of items like bricks, paving, masonry, precast and roofing. Brickworks is the market leader of bricks across Australia.
The company also has a sizeable presence in the US. It acquired three brickmakers in the United States, including Glen Gery, making it the market leader in the north east of the US.
The Australian division is seeing a recovery of earnings as the economy rebounds, however the US division is still suffering.
Brickworks hasn’t cut its dividend for over 40 years. That dividend is supported by two sources of cashflow.
The first is its holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) shares, an investment conglomerate that has grown its dividend every year since 2000 thanks to its diversified and defensive portfolio. Its largest investments include TPG Telecom Ltd (ASX”: TPG), Brickworks, New Hope Corporation Limited (ASX: NHC) and Australian Pharmaceutical Industries Ltd (ASX: API).
The other Brickworks division is its property trust. There’s a joint venture with Goodman Group (ASX: GMG). The joint venture owns industrial properties which are leased to quality tenants. It will soon have Amazon and Coles Group Ltd (ASX: COL) as tenants with two large distribution warehouses being built. This will increase the property trust rental profit distributions by at least 25%.
At the current Brickworks share price it has a grossed-up dividend yield of 4.4%.
Wesfarmers Ltd (ASX: WES)
Wesfarmers is a diversified business that has a number of retail businesses including Bunnings, Officeworks, Catch, Kmart and Target.
The ASX dividend share continues to report growth despite the COVID-19 disruptions. In the first four months of FY21 to October 2020, Bunnings total sales went 25.2%, Kmart sales went up 3.7%, Target sales declined 2.2%, Catch sales grew 114.4% and Officeworks sales went up by 23.4%. Overall, online sales were up 98% excluding the Melbourne online sales.
Its industrial businesses continue to recover from the effects of COVID-19 as well.
At the current Wesfarmers share price, it has a trailing grossed-up dividend yield of 4.7%.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks, RURALFUNDS STAPLED, and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.