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Three stocks to buy with a 5% (or better!) dividend yield

For many investors today, the three sweetest words in the language are not “I love you” or “let’s have another”… but “fully franked dividends”.

No wonder. With term deposits rates hovering around 4% — and likely to fall — solid dividend-paying shares have rarely looked more attractive.

With that in mind, here are three ideas for income-seeking investors. Each company below offers a yield of 5% or better. In fact, the lowest yield is 5.9% while the highest yield is 8%!

Stock #1: Metcash 

In case you’re not familiar with this small competitor to Woolworths (ASX: WOW), Metcash (ASX: MTS) owns and operates supermarkets, hardware stores, petrol stations, and bottle shops, as well as wholesale and distribution businesses. While the share price looks a bit steep at 24 times earnings, investors will be glad to see the fat yield — nearly 7%.

Stock #2: GUD Holdings 

GUD Holdings (ASX: GUD) is in the white goods business, purchasing relatively low-priced toasters and kettles from China, then selling these in Australia under the Sunbeam brand. The company also operates smaller industrial supplies, automotive and water products businesses. With Mr. Market disliking its core white goods business, GUD shares are dirt cheap — trading for less than 6 times earnings. Plus, the dividend is truly hefty, with a yield in the 8% range, fully franked!

Stock #3: David Jones

The long standing (nearly 175 years old) and well known chain of department stores, David Jones (ASX: DJS), looks relatively reasonably priced today, with shares trading for 16 times earnings,  or less than one times sales. While online retail threatens David Jones’ business, this chain has survived and thrived through a variety of economic cycles. The dividend yield is currently in the 5.9% range, fully franked.

In the market for even more high yielding ASX shares? Get “3 Stocks for the Great Dividend Boom” in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading

Motley Fool contributor Catherine Baab-Muguira has no financial interest in any of the companies mentioned in this article. Take Stock is 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.

 

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