It’s not surprising at all that often it is companies and sectors which are somewhat out-of-favour with investors that trade on attractive historic dividend yields.
While often overtly high dividend yields can be a warning sign that the market is expecting a reduction in the future dividend – the mining services sector is an obvious example at present – sometimes decent individual companies simply get marked down with the rest of a sector.
The following four stocks all hail from the retail and traditional media sectors – two sectors which have been largely out-of-favour for some time. Importantly all four stocks are forecast (according to Commsec’s consensus data) to maintain and grow their dividends, and equally importantly earn enough to comfortably fully cover those dividend payments.
Myer Holdings Ltd (ASX: MYR) is forecast to increase its dividend by around one cent to 15.8 cents per share (cps) in financial year (FY) 2015. With the shares currently trading near their year low, the stock is forecast to provide an appealing fully franked yield 7.4%.
Seven West Media Ltd (ASX: SWM) is also trading near its 52-week low and despite expectations that from 2013 to 2015 the dividend will decline slightly from 12 cps to 11.7 cps, analyst consensus forecasts then predicts a sharp rise to 17 cps. While the increase in dividend in FY 2016 would certainly be welcomed, at 11.7 cps Seven West Media is still yielding 6.4% fully franked.
Prime Media Group Limited (ASX: PRT) broadcasts free-to-air television into regional areas. Prime’s dividend is forecast to remain very steady over the next few years, providing shareholders with a fully franked yield of 7%.
RCG Corporation Limited (ASX: RCG) continues to impress despite the headwinds of a difficult retail environment. With RCG’s dividend forecast to rise in coming years, the stock is trading on a FY 2015 fully franked dividend yield of 6.8%.