Getting a dividend from your ASX shares is especially important these days. With interest rates at rock-bottom, other assets like cash and bonds offer returns that are barely keeping up with inflation. This means that yield-hungry investors are being forced into the share market like never before.
But to help ease this pain, I've found 2 ASX shares that offer dividend yields over 10% – that's 10 times more than you can expect from your average savings account these days.
WAM Capital Ltd (ASX: WAM)
WAM Capital is a listed investment company (LIC) that primarily invests in the mid-cap space of the ASX. Its successful modus operandi involves finding undervalued growth companies and selling them once they become fully valued by the market.
Using this strategy, WAM Capital has been able to increase its fully-franked dividend very consistently and substantially. It now offers a whopping 7% starting yield – or 10% grossed-up with franking. WAM shares do trade with a premium to its underlying valuation though – something to keep in mind if you like what you see.
Alumina Limited (ASX: AWC)
Alumina is one of the largest producers of aluminium and alumina in the country and operates in a partnership agreement with the American mining giant Alcoa Corporation. This year, Alumina has paid out dividends totalling 26.1 cents per share – which translates into a yield of 10.53% on current prices (and an eye-watering 15% grossed-up with franking).
However, Alumina is in a highly cyclical industry, and may be unable to maintain this extraordinary payout going forward, so keep this in mind before you rush to get the chequebook out.
Foolish takeaway
Both of these ASX shares offer dividend yields above 10% – some of the highest yields available on the ASX at the current time. However, I would definitely go with WAM Capital if I had to choose, as I have reservations over the sustainability of Alumina's payouts going forward.
