In our low-interest rate world we can no longer rely on bank deposits or bonds for a decent return on our savings. Savers are instead increasingly turning to the share market for increased returns on investment.
Here we take a look at 2 ASX shares offering dividend yields over 8%.
Southern Cross Media Group Ltd (ASX: SXL)
Southern Cross Media Group is currently offering a dividend yield of over 9%. Shares in the company are trading at near record lows for the year at 84 cents having traded as high as $1.37 in July. Southern Cross Media owns Australia’s largest radio network, with 76 analogue stations and 9 capital city digital radio brands.
Shares in Southern Cross Media dropped to a 5-year low in October off updated guidance. Revenues in 1QFY20 were down 8.5% compared to the prior year, with both audio and television segments declining. Southern Cross advised media markets remained weak. Chief Financial Officer Nick McKechnie told the Australian Financial Review that ad spend had missed expectations for the quarter. Southern Cross had previously predicted ad spend would increase in October and November based on a higher number of earlier bookings than the previous year. Instead, the opposite occurred. McKenchnie linked lower advertising spending to levels of consumer and business sentiment in the economy.
On 11 December, Southern Cross Media announced it had refinanced its debt facilities to January 2023. The new facilities consist of a 3 year revolving $435 million facility and a 1 year revolving $25 million facility. The new facilities will be used to pay drawn debt of $325 million and provide financial flexibility going forward.
Southern Cross is focused on maximising its market share while maintaining cost control across all divisions. Advertising markets, however, remain short and volatile. New year increases in business and consumer confidence may provide ballast to advertising markets, which would in turn benefit Southern Cross Media.
Bank of Queensland Limited (ASX: BOQ)
Bank of Queensland is currently yielding 8.80%. BoQ shares have fallen over 2019 and are currently trading at $7.37, on par with 2012 levels. Shares declined over October and November after the bank announced its second dividend cut in a row.
Full year cash earnings declined 14% in FY19 to $320 million while statutory net profit after tax fell 11% to $298 million. Dividends of 65 cents per share were paid, down from 79.6 cents in FY18. Lower year on year cash earnings were predicted for FY20. Disappointing full year results in October were followed by a capital raising in November consisting of a $250 million placement and $25 million share purchase plan. Funds were utilised to strengthen the bank’s balance sheet, provide an increased buffer above APRA’s Common Equity Tier 1 capital ratio benchmark, and create additional capacity for the bank to implement its strategic priorities.
Bank of Queensland is working in a challenging operating environment and has recognised the need to transform, warning FY20 will be a ‘difficult’ year. This may involve further cuts to dividends. The bank is looking to invest in modernising technology infrastructure and digital platforms but has warned transformation will take time. A strategic and productivity review is underway with results expected in February. From there, it is a question of whether the regional lender can execute on its turnaround strategy.
5 stocks under $5
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Motley Fool contributor Kate O'Brien 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.
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