As investors we are always trying to maximise our returns. Most people do this by looking for businesses that will give the best capital gain.
However, there are also businesses out there that generate large dividends with big yields for shareholders. This is particularly useful for retirees who need to maximise their capital.
Here are five shares with dividend yields over 8%:
Cromwell Group (ASX: CMW)
Cromwell is a real estate investment trust (REIT) and also a property fund manager. Quite a few of its tenants are government entities, more than the average REIT. It has been decreasing its leverage over the last few years which puts it in a stronger position, though it is still quite leveraged.
Cromwell pays a quarterly distribution which has been growing since 2011, its current yield is 8.69%.
Mortgage Choice Limited (ASX: MOC)
Mortgage Choice is one of Australia’s largest loan broker groups. It has a growing network of outlets to service the population, which is a good idea because the percentage of mortgages created through brokers has been growing in recent years.
Brokers receive a trailing commission for the life of the loan, without the huge liability that the bank has. The commissions have allowed Mortgage Choice to maintain or grow its dividend every year since 2009 and it’s currently yielding 10.4% when grossed-up with franking credits.
Telstra Corporation Ltd (ASX: TLS)
What dividend yield list would be complete without Telstra? Its large mobile phone user base makes it a force to be reckoned with.
There are a number of problems for Telstra, including competition, the NBN and required capital expenditure over the next few years. However, even if its earnings and dividend do decline somewhat, its current grossed-up yield of 9.8% would still hopefully be over 8%.
WAM Capital Limited (ASX: WAM)
The leading fund from Geoff Wilson and his team produces impressive returns year after year, then pays a lot of that return as a dividend to shareholders.
WAM Capital has grown its dividend every year since 2009 and it currently has a grossed-up yield of 8.36%.
Japara Healthcare Ltd (ASX: JHC)
Japara is one of Australia’s largest aged care operators which has a big potential tailwind with Australia’s ageing population and the number of new beds that will be required.
In the long-term it should be able to grow its profit and dividend nicely. It currently has a grossed-up dividend yield of 8.08%.
All five of these businesses should create pleasing income for investors. At the current prices my favourite three for income are WAM Capital, then Japara and finally Mortgage Choice. However, if you want a whole service specifically designed to generate the maximum income from your capital, you should definitely have a look at the Motley Fool’s new service Everlasting Income.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor Tristan Harrison owns shares of JAPARA DEF SET and WAM Capital Limited. 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.