Commonwealth Bank of Australia (ASX:CBA) is one of three ASX dividend shares offering a fully-franked yield of 4% or greater today
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Why should you pay attention to an ASX dividend share with a yield of at least 4% today? Two words: interest rates.
The Reserve Bank of Australia (RBA) has all-but promised us that the official cash rate will stay at its current record low of 0.1% until at least 2024.
That means that we can all expect lousy returns from any cash or fixed-interest investment until then. Thus, a 4% dividend yield from an ASX share could be a good way to escape this morass of low yields.
So here are 3 ASX dividend shares that offer grossed-up yields of 4% or greater on today’s pricing:
3 ASX dividend shares with a 4% yield or greater
Commonwealth Bank of Australia (ASX: CBA)
CBA, like all of the ASX banks, was hit hard in the coronavirus-induced recession last year. But it has also recovered rather well. CBA shares have risen more than 31% over the past 6 months. The prospect of returning dividends has driven a large part of this investor optimism.
Last month, CommBank announced an interim dividend of $1.50 per share. Together with the mid-pandemic dividend of 98 cents last year, that gives CBA shares a trailing dividend yield of 2.88%, or 4.11% grossed-up with full franking.
However, if we annualise the most recent payout of $1.50 (which might get us a more accurate picture of what is to come), we get a potential yield of 3.49%, or 4.98% grossed-up.
Rio Tinto Limited (ASX: RIO)
Mining giant Rio was one of the companies that emerged from last year’s recession largely unscathed. Investors can probably thank robust iron ore prices for that.
The record high commodity prices (especially iron ore) we have seen in recent months has enabled Rio to shovel cash out the door. Despite the company’s shares rising more than 25% over the past 12 months, Rio shares currently offer a trailing dividend yield of 5.55%, or a healthy 7.93% grossed-up with Rio’s full franking.
Coles Group Ltd (ASX: COL)
The Coles share price has not had some of its best few months recently. In fact, this grocery giant is still down around 13% year to date.
But, as enthusiastic dividend investors know, lower share prices mean higher dividend yields. Especially since Coles hiked its last dividend by 10%.
On current pricing, Coles’ dividend is worth a yield of 3.79%. That’s 5.41% grossed-up with full franking. It also looks pretty good against its arch-rival Woolworths Group Ltd (ASX: WOW) right now, which has only got a 2.49% yield on the table.
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*Returns as of February 15th 2021
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of COLESGROUP DEF SET. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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