Here’s why I think Fortescue Metals Group Limited (ASX: FMG) and 2 other ASX shares are in the buy zone for high-flying dividend yields
The post 3 ASX shares with high-flying dividend yields appeared first on Motley Fool Australia. –
It’s been a struggle to find ASX shares that haven’t slashed their dividends due to difficult trading conditions. COVID-19 has certainly cast an unpredictable environment where once-considered ASX defensive shares have plummeted and retail shares soared.
While past performance is no guarantee for future results, I believe that any investor seeking high-flying dividend yields should look into these ASX shares. After all, it makes sense to get more bang for your buck.
Fortescue Metals Group Limited (ASX: FMG)
The Fortescue share price has stormed 60% higher since the new year. This has been underpinned by the company achieving record revenue in exports on the back of the rising spot price of iron ore.
I think that strong cash flows will continue for this mining outfit as it boasts the world’s lowest cost margins. Fortescue has heavily invested in its expansion and development plans.
The $1.7 billion Eliwana Mine and Rail project is expected to be completed by this December. It is estimated that the company will have a production run of 170 million tonnes per year for a 20-year life span. Fortescue shipped 178.2 million tonnes for the year ending 30 June 2020.
In addition, Fortescue declared a fully-franked dividend of $1.00 per share last month. Total dividends paid for the financial year stood at $1.76 representing a generous yield of 9.9%.
Harvey Norman Holdings Limited (ASX: HVN)
The multi-national retailer has had a bumper year thanks to the surge of a sales uptick during COVID-19. Despite temporary overseas store closures, Harvey Norman reported a record result for its full-year earnings in late August.
I believe the strong shift in consumer behaviour will have a continued impact going into 2021. Harvey Norman has already noted that sales in July and August have increased from the prior corresponding period. Furthermore, overseas sales have improved following the decision to loosen restrictions to the public.
Shareholders were rewarded with a fully franked dividend of 18 cents, a 50% increase on the 12 cents declared for 1H FY20 results. For the year based on the Harvey Norman share price, total dividend yield stands at 7%.
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi has been another standout performer in 2020. The speciality discount retailer saw a 33.2% growth in profits which was underpinned by strong sales. Another contributor was the company’s low-cost operating model that was driven by productive floor space with high sales per square metre.
In JB Hi-Fi’s outlook, total sales in Australia had grown a massive 42.1% for the month of July and sales at the Good Guys were up 40.4%. While growth is anticipated to slow down due to the forced closure of its Melbourne stores, online sales growth has continued to accelerate.
The company flowed its profits through to a dividend pay-out of 90 cents. This was reflected a massive 76.5% increase on the prior year and brought the total dividends for the financial year to $1.89. A total dividend yield of 4.2% on top of the rising JB Hi-Fi share price.
I think that all three of these ASX shares present a buying opportunity. Each of the companies have seen solid growth over the year and passed their profits onto shareholders. Should their fortunes continue, investors will be seeing new share price highs in the near future.
Where to invest $1,000 right now
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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.