The Motley Fool

3 beaten-up ASX dividend shares with big yields to buy for 2020

The coronavirus selloff has caused plenty of dividend shares to be sold off heavily.

I think some dividend shares like Australia and New Zealand Banking Group (ASX: ANZ) could be a yield trap. But there could be some dividend shares that have been heavily sold off that may actually offer great dividend yields if the dividends are at least maintained during this period.

Here are some dividend shares that could be beaten-up income opportunities:

Challenger Ltd (ASX: CGF) 

The annuity leader in Australia has seen its share price fall by 56% (including today’s rise at the open).

Challenger recently said its balance sheet is in a good position with good liquidity. It also said it is on track to achieve its normalised net profit before tax guidance of between $500 million and $550 million for FY20 which includes the impact on the Life investment portfolio and lower funds management earnings.

During the GFC the Challenger dividend was maintained and there is a fair chance that Challenger’s dividend will be maintained again during this period, particularly if it’s able to keep generating solid normalised profits (though the statutory profit will be hit hard this year).

However, it’s a higher-risk option with the ongoing market uncertainty and how low interest rates are. But it does have the ageing demographic tailwinds in its favour for the long-term.

It currently has a fully franked dividend yield of 8.19%.

Brickworks Limited (ASX: BKW)

The leading brickmaker in Australia has seen its share price fall 32%. The dividend was increased by 5% in the recent result and the fully franked yield is now 4.25%.

Construction is in tough spot at the moment and could face even tighter restrictions in the coming weeks depending on the exit strategy that the federal and state governments decide to choose.

However, Brickworks’ other assets of its ‘investments’ and industrial property trust are both providing solid earnings and cashflow to Brickworks while the building products side of things is hurting.

Brickworks has maintained or grown its dividend every year for forty years, so I don’t think that streak is going to end any time soon.

Tassal Group Limited (ASX: TGR)

Tassal is the biggest fish business in Australia with its salmon, prawn and other operations.

Its share price has been sold off just like most of the share market. The Tassal share price is down 17.4% from 13 February 2020. Food demand is high right now, particularly tinned goods which Tassal is a producer of.

Tassal has been steadily growing its operating earnings over the past several years. The dividend has been solid too.

It currently has a partially franked dividend yield of 4.7%.

Foolish takeaway

Each of these shares has a yield over 4.25%, which is very attractive in this environment of ultra-low interest rates. My preference would be Brickworks for its diversification, but Challenger’s dividend could be very good if it’s maintained during this period.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Challenger Limited. 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.

Related Articles...

Latest posts by Tristan Harrison (see all)