With the Reserve Bank of Australia (RBA) keeping the official cash rate at a record low of 0.25% this month, it’s certainly a tough time to be an income investor. Having a ‘traditional’, conservative income portfolio consisting of a mixture of cash, bonds and ASX dividend shares is no longer viable in 2020. Even top-yielding cash investments like term deposits are yielding less than 2% (or even 1%) these days. Ditto with government bonds.
And to make matters worse, a bevvy of former dividend heavyweights have slashed their shareholder payouts this year. These include the ASX banks like Westpac Banking Corp (ASX: WBC) as well as Ramsay Health Care Limited (ASX: RHC), Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD).
Luckily, there are still some ASX shares that do offer solid income prospects. So here are 2 ASX dividend shares offering income yields of more than 6% today for your perusal.
AGL Energy Limited (ASX: AGL)
The AGL share price hasn’t been in investors’ good books this week. This energy giant reported its full-year earnings for FY2020 yesterday, and it wasn’t a pretty sight. Largely due to the coronavirus pandemic, AGL reported a 22% drop in profits after tax, which it expects to get worse in FY2021 before it gets better.
The good news was AGL committing to fund healthy dividend payouts over the next few years, vowing to pay out 100% of its earnings if necessary. Despite the pandemic’s negative impact on AGL, power and gas are still relatively inelastic services, making AGL a great defensive share for your portfolio. As such, I think AGL’s current trailing dividend yield of 7.25% is worth a good look today.
WAM Research Limited (ASX: WAX)
WAM Research is another income share that warrants a good look today in my view. It’s a listed investment company (LIC), which means it only invests in other ASX shares for the benefit of its owners. In WAM Research’s case, only small to mid-cap companies form its portfolio. As of 30 June, these included REA Group Limited (ASX: REA), Breville Group Ltd (ASX: BRG) and Adairs Ltd (ASX: ADH).
But what really attracts me to WAM Research in 2020 is its stupendous dividend yield. On current prices, WAM Research shares are offering a trailing, fully franked yield of 6.96% (which grosses-up to 9.94%). Such a robust dividend yield is a very welcome oasis in a year of arid income opportunities.
I would happily buy either of these 2 ASX dividend shares for strong income in 2020. On current pricing, I think AGL is looking cheap (albeit for good reason), but it’s hard to say no to WAM Research’s high yield as well.
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Returns As of 6th October 2020
Motley Fool contributor Sebastian Bowen owns shares of Ramsay Health Care Limited and WAM Research Limited. The Motley Fool Australia owns shares of Transurban Group. The Motley Fool Australia has recommended Ramsay Health Care Limited and REA Group Limited. 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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