The Motley Fool

2 ASX dividend shares with yields over 5%

Income investors are facing a double whammy in today’s market. Firstly, (as we all know) interest rates are at record lows, essentially making cash investments like term deposits and debt investments like bonds inflation-matching at best, with not much prospect of a real return. Secondly, (and as a result of the first problem) solid dividend paying companies have seen huge levels of capital inflow. This has driven up the share price of bond-proxy stocks like Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) to record highs (and their price-to-dividend yields to record lows as a result).

The consequence of all this is that investors seeking a juicy income in FY20 might have to take on a bit more risk to get a yield north of 5%. Here are two ASX dividend shares that offer just that – not that I would call them risky shares, I just wouldn’t call them bond proxies.

Australia and New Zealand Banking Group (ASX: ANZ)

ANZ bank is looking like the cheapest of the ‘Big Four’ banks right now, with a price-to-earnings ratio of 11.55, giving ANZ a dividend yield of 5.92% (8.46% including franking credits) on current prices. ANZ offers investors a solid banking share with (in my opinion) a more diversified balance sheet than some of the other major banks. By focusing more on business credit and less on retail banking and mortgages, ANZ is better placed to weather any wobbles in the property market.

Of course, if there is a major economic downturn, ANZ (and its dividend) will likely take a hit. But in my view, ANZ is a desirable candidate for any income portfolio

Scentre Group (ASX: SCG)

Scentre is a real estate investment trust (REIT) that was formed after the demerger of the old Westfield Group. Scentre took ownership of the Australian and New Zealand portfolio of Westfield shopping centres, which gives it some of the best retail real estate in the country. Investors have been sceptical of Scentre recently, given the online threats that face the physical retail space. But I think Scentre has adapted its business well and remains one of the highest-quality REITs on the ASX – especially with its current yield of 5.6%.  

Foolish takeaway

Both of these shares are throwing out generous yields above 5% at current prices. Sure they don’t have the safety that a Transurban might offer, but you do get a higher yield as a trade-off. I think Scentre is offering the best bang for your buck on today’s prices, but ANZ isn’t looking too expensive either.

For more great dividend shares, check out some of our Foolish favourites here!

NEW! Top 3 Dividend Bets for 2019

With interest rates likely to stay at rock bottom for months (or YEARS) to come, income-minded investors have nowhere to turn... except dividend shares. That’s why The Motley Fool’s top analysts have just prepared a brand-new report, laying out their top 3 dividend bets for 2019.

Hint: These are 3 shares you’ve probably never come across before.

They’re not the banks. Not Woolies or Wesfarmers or any of the “usual suspects.”

We think these 3 shares offer solid growth prospects over the next 12 months. Each of these three companies boasts fully franked yields and could be a great fit for your diversified portfolio. You’ll discover all three names and codes in "The Motley Fool’s Top 3 Dividend Shares for 2019."

Even better, your copy is free when you click the link below. Fair warning: This report is brand new and may not be available forever. Click the link below to be among the first investors to get access to this timely, important new research!

The names of these top 3 dividend bets are all included. But you will have to hurry. Depending on demand – and how quickly the share prices of these companies move – we may be forced to remove this report.

Click here to claim your free copy right now!

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited and Transurban Group. The Motley Fool Australia has recommended Scentre Group. 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.

One ASX Stock For An Estimated $US22 Billion Marijuana Market

A little-known ASX company just unlocked what some experts think could be the key to profiting off the coming marijuana boom.

And make no mistake – it is coming. To the tune of an estimated $US22 billion.

Cannabis legalisation is sweeping over North America, and full legalisation arrived in Canada in October 2018.

Here’s the best part: we think there’s one ASX stock that’s uniquely positioned to profit immensely from this explosive new industry… taking savvy investors along for what could be one heck of a ride.

AND, this is the first time The Motley Fool Australia has EVER put a BUY recommendation on a marijuana stock.

Simply click below to learn more on how you can profit from the coming cannabis boom.

Click here to find out more