I think there are some ASX dividend shares which pay out huge amounts of cash could be good picks.
It’s hard to make any money from a bank account at the moment because Australia’s official interest rate is now just 0.25% and could go even lower.
Here are some ways to boost income:
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) which is run by the highly-capable team at Wilson Asset management. It targets ASX blue chip shares.
The benefit of the LIC structure is that it can invest in any shares/assets that it sees as an opportunity. Investment gains can be generated by both capital growth and dividends received. That combined investment return can then be used to pay a solid dividend to investors. LICs can be very good ASX dividend shares with this setup.
In the latest WAM Leaders update, it was able to point to strong investment performance in the short-term and the long-term.
Over the past year, WAM Leaders’ gross portfolio return (before fees, expenses and taxes) has been 5.6% – outperforming the S&P/ASX 200 Accumulation Index by 10.7%. Since inception in May 2016, WAM Leaders’ portfolio return has been 10.6% per annum, outperforming the index by 3.5%.
WAM Leaders has been able to use this strong performance to pay a growing dividend each year since FY17.
Including the guidance of an interim FY21 dividend of 3.5 cents per share, WAM Leaders offers a grossed-up dividend yield of 7.8%.
Pacific Current Group Ltd (ASX: PAC)
Pacific Current is an asset management company which has strategic stakes in other asset managers and tries to help them grow.
The ASX dividend share is on an upwards trend with a few key investments doing really well, with GQG growing its funds under management (FUM) increased from US$25.1 billion to US$44.6 billion in FY20.
Excluding boutiques sold and acquired during the year, Pacific’s FUM rose 52% despite COVID-19. It ended with FUM of A$93.3 billion in FY20.
The strong level of growth helped the ASX dividend share’s underlying earnings per share (EPS) rose by 18% to $0.44 per share. This earnings growth help support a 40% increase of total dividends to $0.35 per share.
At the current Pacific Group share price it offers a trailing grossed-up dividend yield of 8.3%.
The company thinks it will secure new commitments in FY21. It could have a grossed-up dividend yield of 9.5% for FY21 if it grows its underlying earnings nicely again.
NAOS Small Cap Opportunities Company Ltd (ASX: NSC)
This is another LIC, but it targets much smaller businesses than the ones that WAM Leaders looks at.
The ASX dividend share’s hunting ground is ASX shares with market capitalisations between $100 million and $1 billion. Smaller businesses have more return potential, partly due to their size and partly because mainstream investors haven’t discovered the business yet.
NAOS Small Cap Opportunities Company has a high conviction portfolio of around 10 names. Some of those picks include: Eureka Group Holdings Ltd (ASX: EGH), Consolidated Operations Group Ltd (ASX: COG), MNF Group Ltd (ASX: MNF), BSA Limited (ASX: BSA) and Over The Wire Holdings Ltd (ASX: OTW). I think that’s a solid group of businesses.
The ASX dividend share has settled into paying a 1 cent per share dividend every quarter. At the current NAOS Small Cap Opportunities Company share price it has a grossed-up dividend yield of around 10%.
It’s also trading at a 18.3% discount to its August 2020 pre-tax net tangible assets (NTA) per share. That’s a pretty big discount.
Each of these ASX dividend shares offer a big dividend and seem to be at least maintaining their payments to shareholders. WAM Leaders and Pacific are growing the dividends. At the current prices I think Pacific could be the best buy because of its medium-term growth prospects. However, both of the LICs could offer attractive diversified income for your portfolio.