Most Australian investors expect solid dividend payments from the country’s large banks, including Commonwealth Bank (ASX: CBA), with its 5% yield, and Westpac (ASX: WPC), which also pays a yield in the 5% range.
But if your portfolio is already well kitted out with bank shares, you may want to look to the two companies below for additional income.
Idea #1: Tabcorp
Tabcorp (ASX: TAH) is a Melbourne-headquartered gambling and leisure products company with a market cap of about $2.5 billion. Its four business segments include Wagering, Media & International, Gaming, and Keno.
As my colleague Mike King recently put it: “Think of Tabcorp as a utility company with a firm handhold on the Australian gambling pipeline (at least in NSW, Queensland and Victoria), with practically guaranteed revenues over the next 10-12 years, unless management do something completely mad, or Australians suddenly change their gambling habits.”
The company’s dividend yield is in the 6.5% range, fully franked, and shares are trading at a forgiving P/E ratio of just 7.2.
Idea #2: APA Group
APA Group (ASX: APA), a Sydney-based gas infrastructure company and asset manager, offers a dividend yield over 5%, unfranked. The company’s sales and net income have posted strong growth over the last five years. In 2008, revenue came in at $878 million and net income at $67 million. By 2012, revenue had grown to $1.16 billion and net income to nearly $277 million.
While the share price has already risen nearly 30% this year, the company is trading for just 16 times earnings, a reasonable multiple given the company’s consistent revenue streams and modest growth prospects going forward.
BONUS idea: Telstra
Telstra’s fully franked 28 cent dividend is legendary, and chances are that even if you don’t own the shares directly, your superannuation fund does.
But with its share price skyrocketing over the past year, is Telstra past its prime? Find out a top analyst’s take on this compelling question now, FREE. Simply click here for our brand-new FREE report: “Is It Time to Sell Telstra?”
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.
Our experts here at The Motley Fool Australia have just released a fantastic report, detailing 5 dirt cheap shares that you can buy in 2020.
One stock is an Australian internet darling with a rock solid reputation and an exciting new business line that promises years (or even decades) of growth… while trading at an ultra-low price…
Another is a diversified conglomerate trading over 40% off its high, all while offering a fully franked dividend yield over 3%...
Plus 3 more cheap bets that could position you to profit over the next 12 months!
See for yourself now. Simply click here or the link below to scoop up your FREE copy and discover all 5 shares. But you will want to hurry – this free report is available for a brief time only.