In this article are three ASX dividend shares that have large dividend yields and consistent payouts.
The Reserve Bank of Australia (RBA) recently cut the official interest rate to just 0.10%.
There are some businesses on the ASX that have yields much higher than that:
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi has a grossed-up dividend yield of 5.9% at the current JB Hi-Fi share price. It has grown its dividend each year since FY13.
In FY20 the company grew its final dividend by 76.5% to 90 cents per share, bringing the full year dividend to 189 cents per share – an increase of 33.1%.
The dividend growth was supported by the increase in sales and net profit. Total sales increased by 11.6% to $7.9 billion whilst underlying earnings per share (EPS) went up by 33.2%.
The ASX dividend share delivered much higher online sales due to the effects of COVID-19. JB Hi-Fi saw nearly $600 million of online sales, which was up 50% year on year. The fourth quarter saw online sales rise by 134%.
That revenue growth has continued in the first quarter of FY21 where JB Hi-Fi Australia sales rose by 27.3% and The Good Guys revenue grew by 30.9%. Melbourne metro stores are now re-open.
Service Stream Limited (ASX: SSM)
Service Stream is a business involved in the design, construction, operations and maintenance of assets across Australian networks.
One of its biggest clients is the NBN. It recently extended its operations and maintenance master agreement with the NBN. This contract generated $330 million of revenue in FY20 and $280 million in FY19.
Service Stream maintained its dividend in FY20, and had been steadily growing its dividend for years before that. At the Service Stream share price it currently offers a grossed-up dividend yield of 5.9%.
The ASX dividend share’s management is working on diversifying its revenue away from telecommunications, expanding its client base, growing its exposure to a broad range of regulated essential infrastructure markets and building a base of long-term, capital light contractual agreements.
Rural Funds Group (ASX: RFF)
Rural Funds is an agricultural real estate investment trust (REIT). It owns a variety of farm types including cattle, vineyards, cropping (sugar and cotton), macadamias and almonds. Rural Funds used to own poultry assets, but it recently sold those.
It has a goal of steadily growing the distribution by 4% each year. This is supported by two pillars.
There is contracted rental growth built into all of Rural Funds’ tenancy agreements. That indexation is either a fixed 2.5%, or it’s linked to CPI inflation, with some having market reviews.
Rural Funds has also been working on investing in productivity improvements at its farms. The idea is that it will increase the value of the farm as well as unlock more rental income over time.
The ASX dividend share’s properties are spread across different states and climactic conditions. It doesn’t carry the operational risks like the agricultural tenant does, but it does own water entitlements which can be leased to the farmers for them to be used, if needed.
In FY21 the farmland REIT has provided distribution guidance growth of 4% to 11.28 cents per unit. At the current Rural Funds share price it has a forward distribution yield of 4.4%.
At the end of FY20 it had an adjusted net asset value (NAV) per unit of $1.94. The asset value is adjusted to include the market value of the water entitlements, rather than the (lower) cost price of the water entitlements. That means it’s currently valued at a 31.9% premium.