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3 blue chips with big yields

Credit: Simon Cunningham

Dividends are one of the most pleasing aspects about investing in shares. It’s so satisfying to do no work for the companies you own, yet receive a dividend every six months.

Not only that, but the income on offer from many ASX shares is a lot higher than you could possibly get from all the various bank accounts that are out there. Even the best ones only offer an interest rate of around 2.8% to 3%.

So, to solve that income dilemma, here are three excellent income shares on the ASX:

Japara Healthcare Ltd (ASX: JHC)

Japara is one of the largest aged care providers in Australia. The ageing demographics of Australia suggest that as more people retire they will eventually need to be in an aged care facility starting at around the age of 75 to 80.

According to industry estimates this could mean many thousands of extra beds are needed over the next decade or so. That’s why Japara is on track to add around 1,000 beds over the next few years with its own developments. The aged care company also recently completed the acquisition of another aged care provider called Riviera Health which added 507 bed licenses.

Japara currently has a grossed-up dividend yield of 7%.

Macquarie Group Ltd (ASX: MQG)

Macquarie is Australia’s leading investment bank. It’s my favourite big bank by far because a majority of its earnings are generated overseas.

The bank is also concentrating on growth areas for its money, rather than riskier cyclical ideas like the mortgage market. Macquarie’s leadership has identified infrastructure spending, renewable energy and Asia as three areas that will need big investment in the coming years. This is why I’m confident that the bank can keep growing strongly for the long-term.

Macquarie is currently trading with a partially franked dividend yield of 4.64%.

Insurance Australia Group (ASX: IAG)

It’s a big vote of confidence when Warren Buffett’s Berkshire Hathaway takes a stake in your business, which is what happened to IAG. The insurance giant is generating decent underlying growth for a market-leading business.

I also like that it has a presence in India, Malaysia, Vietnam, Thailand and Indonesia. Some investors may be scared of insurance companies due to automated cars, but charging a small premium with zero crashes sounds like pure profit to me.

IAG is currently trading with a grossed-up dividend yield of 6.48%.

Foolish takeaway

All three shares could be decent options at today’s prices. I would likely pick Japara first because of the ageing tailwind it has, whereas the other two are much more reliant on the national and global economies continuing to grow.

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Motley Fool contributor Tristan Harrison owns shares of JAPARA DEF SET. The Motley Fool Australia owns shares of Insurance Australia Group Limited. 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 Scott Phillips.

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