There are dividend shares out there trading at mega cheap prices.
The coronavirus selloff has caused share prices to plunge and that has pushed the trailing dividend yields higher. There’s no guarantee that the dividends will be maintained at the level they are over the next 12 months, but I think there’s a great chance the long-term dividends will be very attractive:
PM Capital Global Opportunities Fund Ltd (ASX: PGF)
This is a listed investment company that is focused on global shares. Since 21 February 2020 its share price has dropped almost 30% to $0.88.
However, when the LIC released its latest net tangible asset (NTA) update, the LIC revealed its pre-tax NTA at 27 March 2020 was $1.06. That means it’s trading at a 17% discount to the NTA on top of the falls that the NTA has already suffered.
The falls have pushed the trailing grossed-up dividend yield to 6.5%.
Whilst its underlying holdings have been sold down like everything else, the falling Australian dollar has been useful for protecting the value for Aussie investors.
Brickworks Limited (ASX: BKW)
The Brickworks share price has dropped by 33% since the falls started.
In the recent FY20 half-year result the Brickworks dividend was increased by 5%. It now has a grossed-up dividend yield of 6.25%. That is a great yield considering how low the RBA interest rate has gone.
Construction activity in Australia and the US is obviously going to be lower than a couple of months ago. But it’s not going to be permanently lower. I’m sure the construction sector is raring to get back into it when it’s safe to do so.
In the meantime, Brickworks’ cashflow and valuation is backed up by its ‘investments’ and industrial property trust.
The company has maintained or grown its dividend every year for over four decades.
At the moment I think the best buy of the two would be Brickworks because it has very defensive assets to help it during this period. PM Capital Global Opportunities Fund is a good long-term option too.
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Motley Fool contributor Tristan Harrison owns shares of PM Capital Global Opportunities Fund Ltd. The Motley Fool Australia has recommended Brickworks. 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.