I have to say that I was fairly surprised to learn that at least 57 companies on the ASX are offering dividend yields of more than 7%.
Many are unlikely to sustain those yields – as I mentioned yesterday when looking at the retail sector.
Here are 7 companies that could well continue to pay out huge dividends to investors.
|Mortgage Choice Limited (ASX: MOC)||2.07||0.165||8.0%||11.4%|
|Clime Investment Management Limited (ASX: CIW)||0.61||0.06||9.8%||14.1%|
|National Australia Bank Ltd. (ASX: NAB)||28||1.98||7.1%||10.1%|
|Industria REIT (ASX: IDR)||2.14||0.15||7.0%||7.0%|
|360 Capital Industrial Fund (ASX: TIX)||2.73||0.2158||7.9%||7.9%|
|Cromwell Group (ASX: CMW)||0.96||0.082||8.5%||8.5%|
|Villa World Ltd (ASX: VLW)||2.32||0.18||7.8%||11.1%|
Source: Company reports, Commsec
One key factor to also consider is franking credits. Of the companies above, Industrea, 360 Capital, Cromwell all pay unfranked dividends. Franking credits can boost the after-tax returns investors receive considerably – particularly for those investors in low tax brackets or investors in retirement – as the last column in the table above shows.
Offsetting that is the fact that the real estate investment trusts (A-REITs) 360 Capital Industrial Fund and Cromwell Group both pay their dividends out on a quarterly basis.
For those looking for regular income, those two companies might be the perfect pick.
Looking into each of the seven companies above suggests that they are all able to sustain their dividends going forward, as long as they can maintain or grow their earnings.
That might be an issue for National Australia Bank, with credit growth slowing and already low, higher capital requirements and higher funding costs.
It’s quite possible to hold a portfolio of companies all delivering yields of more than 7%. Including franking credits, the seven stocks above average around 10%. With a return like that matching the long-term returns on the stock market from both income and capital growth, it doesn’t take much to beat the index.