Income investors are spoiled for choice in the market right now. When National Australia Bank Ltd. (ASX: NAB) pays a 6% dividend fully franked, why bother shopping around? Still, there are plenty of alternatives and here are 3 more companies that pay more than 6% in dividends:
Thorn Group Ltd (ASX: TGA) – trailing yield of 8.2% fully franked
First off, Thorn’s dividend will be cut this year due to some of the challenges it faces, and I estimate it might pay a 6.5% dividend at today’s prices. This consumer leasing company has been beaten up by market fears regarding a possible regulatory penalty, changes to legislation that will cap its profitability, and now a class action lawsuit.
However, shares are also priced at around 9x its forecast full year earnings, which suggests that much of the impact appears already priced in. Thorn could be worth holding as part of a diversified income portfolio, in my opinion.
G8 Education Ltd (ASX: GEM) – yields 6.5% fully franked
Shares in G8 Education have come down in price recently – they were looking pricey at above $4 – and the company’s dividend yield has correspondingly grown to a staunch 6.5%, which is paid quarterly. This is a debt-laden business that grows primarily through acquisition, and has been facing some issues with competition and lower occupancy recently.
Unlike Thorn however, it is not priced cheaply enough to make it a standout buy. G8’s share price is around 18x its earnings, and I would prefer to get it a bit cheaper.
Genesis Energy Ltd (ASX: GNE) – yields 8.4% unfranked
This New Zealand energy utility generates strong levels of free cash flow and pays a very high dividend that appears sustainable. Recent projects by management are expected to lead to a lower cost of acquiring customers and some short-term revenue growth. Earnings are also expected to be higher in the near term as Genesis’ oil and gas assets return to full production, although I believe the company is unlikely to grow its dividends quickly.
Genesis Energy carries a safe level of debt, although it remains vulnerable to fluctuations in power prices which can be sharper than usual due to New Zealand’s large use of renewables. Genesis could be worth a closer look for income-seeking investors.
Not keen on Thorn, G8 Education or Genesis? Here are 3 strong blue chips that I think are an attractive opportunity instead:
For many, blue chip stocks means stability, profitability and regular dividends, often fully franked..
But knowing which blue chips to buy, and when, can be fraught with danger.
The Motley Fool’s in-house analyst team has poured over thousands of hours worth of proprietary research to bring you the names of "The Motley Fool’s Top 3 Blue Chip Stocks for 2017."
Each one pays a fully franked dividend. Each one has not only grown its profits, but has also grown its dividend. One increased it by a whopping 33%, while another trades on a grossed up (fully franked) dividend yield of almost 7%.
If you’re expecting to see the likes of Commonwealth Bank, Telstra and Wesfarmers shares on this list, you’ll be sorely disappointed. Not only are their dividends growing at a snail’s pace, their profits are under pressure too due to the increasing competitive environment.
The contrast to these “new breed” blue chips couldn’t be greater… especially the very real prospect of significant share price gains, something that’s looking less likely from the usual blue chip suspects.
The names of these Top 3 ASX Blue Chips are included in this specially prepared free report. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies moves – we may be forced to remove this report.
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Motley Fool contributor Sean O'Neill owns shares of Thorn Group 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.