With interest rates at record lows, both in Australia and across the world, the hunt for dividend yield is well and truly on in the ASX these days. The lack of ‘safer’ alternatives is pushing more and more reluctant investors into the share market in the search for meaningful returns on capital.
Whilst this is an unfortunate consequence of our current interest rate environment, there’s not much relief in sight, it seems. Thus, finding good quality shares that can generate consistently high yields is more important than ever.
Here are 2 ASX blue-chip shares that I think offer investors meaningful returns from dividend income today.
BHP Group Ltd (ASX: BHP)
BHP is one of the most famous stocks on the ASX due to its long history as one of Australia’s first mining companies. Today, BHP is one of the largest miners on the planet and has vast operations in the iron ore, coal, oil and copper fields. By having some of the lowest-cost operations in the industry, BHP is regularly able to shower its shareholders with dividend income, which its owners this year would be very aware of.
BHP offers a trailing dividend yield of 4.97% today (7.1% grossed-up). Whilst miners like BHP are highly cyclical (and thus, so are their dividends), I think this company is still a great buy for the long-term.
Australia and New Zealand Banking Group (ASX: ANZ)
ANZ has been caught up in the structural challenges facing all of the big banks at the moment. Whilst not having the same kind of…. legal issues that its stablemate Westpac Baking Corp (ASX: WBC) is dealing with at the moment, low interest rates and a sluggish economy are still weighing on this bank.
For these reasons, ANZ has recently reduced the level of franking its shareholders can expect to receive from ANZ’s dividends – down from 100% to 70% in its recently announced final dividend. Still, on current prices, ANZ shares are offering a yield of 6.4%, which translates to 8.32% grossed-up at 70% franking. Thus, I think ANZ shares might be worth a look at their current levels.
With these 2 ASX blue-chip shares, I think you are being offered some compelling income potential. Both have strong yields and both have a long history of delivering huge returns to their shareholders, thus I think both would make great additions to an income focused portfolio.
Where to invest $1,000 right now
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Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. 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.