Let’s face it, there’s not much fun seeing your cash laying around in a bank account earning a piddly 2% per annum in interest. If you’re itching to put some cash to work and you’re looking for high yield shares, I have a couple of ideas… Commonwealth Bank of Australia (ASX: CBA) For a long time, the company has traded at a premium because of its brand and slightly better performance metrics, but after the money laundering scandal and fallout from the Royal Commission, CBA now trades more in line with its peers in terms of valuation. With sluggish property markets…
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Let’s face it, there’s not much fun seeing your cash laying around in a bank account earning a piddly 2% per annum in interest. If you’re itching to put some cash to work and you’re looking for high yield shares, I have a couple of ideas…
Commonwealth Bank of Australia (ASX: CBA)
For a long time, the company has traded at a premium because of its brand and slightly better performance metrics, but after the money laundering scandal and fallout from the Royal Commission, CBA now trades more in line with its peers in terms of valuation.
With sluggish property markets in our major capitals, as well as more stringent lending criteria, the outlook for credit growth now looks rather weak. The one thing we can count on though, is CBA’s dividend, which the company will be very reluctant to trim, given the income-hungry shareholder base.
The current payout ratio looks safe at 77% and shares are now trading on a gross dividend yield of around 8.3%.
Centuria Metropolitan REIT (ASX: CMA)
This is Australia’s largest ASX-listed metropolitan office REIT. CMA owns a portfolio of 19 high-quality metropolitan assets with a total value of around $900 million spread across all of our major cities.
The demand for metropolitan office space will continue to grow, and CMA targets areas – often on the city-fringe away from construction hotspots – which have an undersupply of office space, yet good underlying demand.
The portfolio’s occupancy rate is a solid 97.8% and rental increases are locked in at an average of 3.6% per annum. This underpins the current yield and also means there’s a decent chance distributions increase over the next few years. It currently trades on a yield of 7.3%.
WAM Research Limited (ASX: WAX)
Managed by Wilson Asset Management, WAM Research has been one of the best-performing LICs over the last 5 and 10 years, focusing on growth companies in the small-cap space.
One of the main goals of this LIC is to provide an increasing stream of fully-franked dividends, which the company funds from harvesting capital gains in the portfolio. It’s done a good job of that, with dividends increasing from 5 cents per share in 2008, to 9.5 cents per share (forecast) for 2018. That’s almost a doubling of dividends since the GFC.
WAM Research trades at a hefty premium to NTA though – around 25% currently – so it’s not one I’d rush into. Despite the premium, it still trades on a huge fully franked dividend, which grosses up to 8.8%.
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Motley Fool contributor Dave Gow owns shares of Centuria Metropolitan REIT and WAM Research 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 Scott Phillips.