Revealed: 3 dividend shares with yields over 5%

The share market can be very volatile day to day or even year to year. If you’re relying on capital growth for your returns then you may not achieve it in the short term, even if you invest in great businesses.

Perhaps another approach would be to invest in high-yielding businesses that pay out solid, fully franked dividends year after year.

Here are three that could fit the bill:

Mortgage Choice Limited (ASX: MOC)

Mortgage Choice is one of Australia’s largest mortgage brokers with a market capitalisation of $252 million.

It has been a growing beneficiary of the property boom thanks to all the loans that it has brokered over the last decade.

Mortgage brokers receive a trailing commission for the life of the loan. This means they get the benefit of the growth of loans, but don’t have the large loan book that the banks do.

This strategy has allowed Mortgage Choice to maintain or increase its dividend every year since the GFC. It’s currently trading at 13x FY16’s earnings with a grossed-up dividend yield of 12%.

Clime Capital Limited (ASX: CAM)

Clime is a listed investment company (LIC) with a market capitalisation of $77 million.

It has performed pretty well over the last few years but I’m most interested in this LIC because it recently changed its strategy to also include overseas shares in its portfolio, whilst mostly still focusing on Australia.

There are very few options on the ASX that offer a big dividend yield and exposure to overseas investments. Clime is currently trading with a grossed-up dividend yield of 7.97%.

Rural Funds Group (ASX: RFF)

Rural Funds Group is the only ASX-listed real estate investment trust that purely focuses on agricultural property. It currently has a market capitalisation of $370 million.

Not only does Rural Funds Group have a great portfolio of properties and tenants, it also has significant water entitlements which could be vital if Australia experiences a period of drought.

Rural Funds could benefit in the long term as the global population increases and farmland becomes more valuable.

It’s currently trading with a distribution yield of 5.31%.

Foolish takeaway

I like all three businesses, but the growth of internet-only brokers makes me a bit wary of Mortgage Choice.

I really like Rural Funds Group as a long-term investment and Clime could be an interesting choice if it can capitalise well on its overseas investments.

A stock even better than the three I mentioned above could be our number one dividend pick for 2017 which has a huge yield.


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The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of RURALFUNDS STAPLED. Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. 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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