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Can these 7 companies sustain their huge 7% or higher dividend yields?

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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.

Company price dividend yield incl franking
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.

Foolish takeaway

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.

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Returns As of 6th October 2020

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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 Bruce Jackson.

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