3 ASX shares with large dividend yields

In this article are 3 ASX dividend shares with large dividend yields. One of those businesses is Pacific Current Group Ltd (ASX:PAC).

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In this article are three ASX shares with large dividend yields.

The Reserve Bank of Australia (RBA) recently decided to reduce the official interest rate to 0.10%.

These ASX shares offer higher dividend yields than what bank saving accounts are offering:

Pacific Current Group Ltd (ASX: PAC)

This is a business that invests in boutique asset management. Indeed, it aims to partner with “exceptional” investment managers. It combines its capital with strategic business development through bespoke economic structures. 

According to the ASX, Pacific has a market capitalisation of $302 million.

In FY20 it grew the dividend by 40% to $0.35 per share. This was funded by underlying earnings per share growth of 18% to $0.44 per share. That means at the current Pacific Current Group share price it is priced at under 14x FY20’s underlying earnings. It also has a trailing grossed-up dividend yield of 8.3%.

The ASX share managed to increase its funds under management (FUM) to $93.3 billion. When excluding boutiques sold or acquired during the year, FUM rose 52%. GQG, one of its main investments, grew FUM from US$25.1 billion to US$44.6 billion.

The FUM growth continued into the first quarter of FY21. FUM went up 14% to $106.4 billion. However, in native currency terms, US dollar orientated fund managers saw FUM rise by 19.3% – FUM growth in Australian dollar terms was reduced by the strength of the Australian dollar.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is a fund manager which specialises in investing in international shares. However, it also has investment strategies that focus on infrastructure shares and Australian shares.

The business earns base management fees from its FUM. If the fund manager outperforms its benchmark then it can also receive performance fees.

The fund manager reported a 26% increase in the average FUM to $95.5 billion in FY20. The FUM had risen to $103.5 billion by the end of October 2020.

In FY20 the ASX share increased its total dividends by 16% to 214.9 cents per share. It also grew its adjusted diluted EPS by 17% to 241.5 cents. That means that, at the current Magellan share price, it has a grossed-up dividend yield of 4.8%. It also means it is valued at 25x FY20’s underlying earnings.

The ASX share recently announced that it was making a major investment into a new investment bank called Barrenjoey which has signed up a number of high-profile people to work there and it will offer a wide array of services.

Brickworks Limited (ASX: BKW)

Brickworks is a building construction business that sells a wide variety of products in Australia including bricks, masonry, paving, precast and roofing.

The company actually owns around 40% of investment conglomerate Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) as well, which sends steadily-climbing dividends to Brickworks.

It also owns 50% of an industrial property trust along with Goodman Group (ASX: GMG). At the end of FY20, its total assets stood at over $2 billion. After including debt, Brickworks’ share of net assets was $727 million.

Brickworks just held its annual general meeting and said that development activity by the property trust has continued at an unprecedented scale. At Oakdale West in Sydney, construction of the Amazon distribution facility is well advanced and is due to be completed in September 2021. Brickworks also said that infrastructure works are proceeding to schedule and will allow construction of the Coles Group Ltd (ASX: COL) distribution warehouse to commence early in 2021.

Once these two facilities are completed, net rental distributions will increase by over 25% and gross assets held within the property trust is expected to exceed $3 billion. Management said that there is sufficient remaining land to provide at least a further five years of development.

At the current Brickworks share price it has a trailing grossed-up dividend yield of 4.2%.

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*Returns as of January 12th 2022

Motley Fool contributor Tristan Harrison owns shares of Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of and has recommended Brickworks and Washington H. Soul Pattinson and Company Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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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