Behind the turbulence of the Covid-19 crisis the hunt for high yielding shares goes on. The three high yield ASX shares below will be going ex-dividend this week, which means you will need to buy these shares before that date to receive that payment.
All 3 are very interesting companies, and the recent fall in their share prices has increased the yield from this payment alone. Each have their challenges, but all represent medium to low level risk over the medium term.
If you are investing for yield and want to at least protect your capital then these 3 shares are worth looking into further. In the case of future capital gains, your dividend yield will be higher based on the low purchase price.
Small cap marketing
Ive Group Ltd (ASX: IGL) goes ex-dividend on Wednesday 11 March. It is paying $0.086. On Friday’s closing share price of $1.74, this is a yield of 4.96% for this payment.
Ive Group is a marketing company with a focus primarily on the retail sector. Listed since late 2015, Ive Group has established itself impressively in its first 4 years of financial results. Its compound annual growth rate (CAGR) of absolute cash flow (not per share) is 21.6% with an impressive sales CAGR of 16.3%.
It has an earnings yield of 12.7% and has delivered a return on capital employed (ROCE) of 15% for the past two financial years. The market has given this company a low valuation and it is very good at turning capital into profits.
The company fell 18.8% in the first week of the sell offs and is down 19.3% since Monday 21 February.
An undervalued airline
The Air New Zealand Limited (ASX: AIZ) share price dropped by 16.4% in the week beginning 21 February due to the direct impact of the coronavirus outbreak. It continued to fall a further 9% last week.
At Friday’s closing price of $1.99, the dividend payment will yield 5.29%. Air New Zealand goes ex-dividend on Thursday 12 February. Its H1 earnings were down on the previous corresponding period due to softer cargo market and tensions in Hong Kong. They will continue to be down for most of this half due to the virus.
Air New Zealand manages a good company with a 10 year earnings per share (EPS) CAGR of 12.6%, an earnings yield of 11.6% and an ROCE of 8%. In other words, it is a company that has moderate skill at consistently turning capital into profit and is currently selling at a cheap price.
Neglected coal companies
The coal industry has been pretty neglected for a long time for a variety of reasons. The result is a range of companies that are well managed regularly throwing off cash and selling at very low earnings multiples.
Yancoal Australia Ltd (ASX: YAL) is the king of dividends this week, with a 7.58% yield on Friday’s closing share price of $2.80.
Yancoal is Australia’s largest pure play coal company. Its share price fell only 2% with the market on 21 February. Yancoal has a very volatile share price, which is not indicative of the company’s performance and is pushing into heavy headwinds with a lowering thermal coal spot price.
It has an earnings yield of 16.8%, a CAGR of absolute cash flow of 55.8% and a ROCE of around 10%. Yancoal believes maintenance in Japanese coal fired power stations will help reignite the thermal coal price.
In my opinion, buying at this price will lock in high yields for the foreseeable future. Capital growth is likely to be slow, even though it is clearly a well managed company.
The market sell off continues to benefit the intelligent investor who has kept cash on hand and doesn’t have to sell shares. I believe these 3 companies offer investors the ability to pick up a very good interim or final dividend yield within a short period of time and the potential to either sell out again later at no capital loss or to keep these assets for their continued high yields.
These 3 stocks could be the next big movers in 2020
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In this FREE STOCK REPORT, Scott just revealed what he believes are the 3 ASX stocks for the post COVID world that investors should buy right now while they still can. These stocks are trading at dirt-cheap prices and Scott thinks these could really go gangbusters as we move into ‘the new normal’.
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Motley Fool contributor Daryl Mather 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.