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.
