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3 ASX dividend shares with yields above 5%

The 3 ASX dividend shares in this article have yields of more than 5%. One of them is furniture business Nick Scali Limited (ASX:NCK).
The post 3 ASX dividend shares with yields above 5% appeared first on The Motley Fool Australia. –

ASX dividend shares

There are some ASX dividend shares that have yields of more than 5%.

Higher yields may be attractive to some income-seeking investors that are struggling to find yield.

Here are some examples of businesses with yields of more than 5%:

Charter Hall Long WALE REIT (ASX: CLW)

This is a commercial property trust, it’s a real estate investment trust (REIT). It owns a variety of properties in different sectors such as Bunnings properties, service stations, telco exchanges, offices, grocery and distribution, agri-logistics and retail properties with long weighted average lease expiry dates such as the David Jones flagship store in Sydney.

Its major tenants by income are Telstra Corporation Ltd (ASX: TLS) accounting for 19% of the rental income, Australian government entities accounting for 16%, BP accounting for 14% and Woolworths Group Ltd (ASX: WOW) accounting for 13%.

As the name may suggest, it has a long dated lease expiry profile of around 14 years.

The ASX dividend share is expecting to generate no less than 29.1 cents of operating earnings per share (EPS) in FY21. Assuming a 100% distribution payout ratio, that equates to a forward distribution yield of 6.3%.

In FY20 its operating EPS was 28.3 cents per unit, which was an increase of 5.2% on the prior corresponding period. The distribution per unit was also 28.3 cents.

Pacific Current Group Ltd (ASX: PAC)

Pacific is a small cap ASX dividend share which invests in fund managers around the world. The company tries to find managers that have growth potential where it can help them with its expertise or capital to grow.

As the fund manager’s funds under management (FUM) grows, then Pacific Current benefits.

In FY20 the ASX dividend share saw its FUM increase by 62% to $93 billion, which helped underlying EPS rise by 18% to $0.51. The annual dividend per share was increased by the Pacific board by 40% to $0.35.

In the quarter to 30 September 2020, Pacific Current said that FUM had risen by 14% to $106.4 billion. In the subsequent three months to 31 December 2020 FUM rose by another 8.3% to $112.8 billion.

The fund manager GQG is the biggest driver of growth for Pacific. In the 12 months to 31 December 2020, GQG saw its FUM increase by more than US$35 billion.

In native currencies, US dollar orientated fund managers saw FUM increase by 16.9%. When converting to Australian dollars, the increase was partly offset by the significant increase of the Australian dollar against the US dollar.

Pacific currently has a trailing grossed-up dividend yield of 8.1%.

Nick Scali Limited (ASX: NCK)

Nick Scali is a furniture retailer that continues to see elevated levels of demand since COVID-19 hit the world.

In the FY21 first half result, the company is expecting unaudited net profit after tax (NPAT) to be $40.5 million, which would be growth of approximately 100%. There was better than expected container availability during the months of November and December leading to increased delivery volumes.

Total written sales orders for the first quarter of FY21 grew 45% and there was growth of 58% in the second quarter for the ASX dividend share.

In FY20, Nick Scali’s net profit after tax was flat at $42.1 million, but it increased the final dividend by 12.5% to 22.5 cents. That brought the full year dividend to 47.5 cents per share.

At the current Nick Scali share price, it has a trailing grossed-up dividend yield of 6.6%.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post 3 ASX dividend shares with yields above 5% appeared first on The Motley Fool Australia.

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