In this article are four small cap ASX dividend shares with large yields.
Small caps are businesses that are smaller than many well-known companies. The definition of a small cap normally means having a market capitalisation of less than $1 billion.
Here are four examples of businesses that are relatively small, but have a large dividend yield:
Pacific Current Group Ltd (ASX: PAC)
This is a business that takes strategic stakes in fund managers and tries to help them grow with the expertise it has gained.
In FY20 the small cap ASX share increased its dividend by 40% to $0.35 per share, which was supported by an increase of underlying earnings per share (EPS) growth of 18% to $0.44 per share. That means at the current Pacific Current share price it has a trailing grossed-up dividend yield of 8%.
Its funds under management (FUM), which is a driver of earnings, grew by 14% to $106.4 billion in the first quarter of FY21 for the three months to 30 September 2020.
360 Capital REIT (ASX: TOT)
This is a fund of diversified assets across real estate equity, debt and real estate based operating businesses with a history of quarterly distributions. It has access to real estate based investment opportunities available through its manager 360 Capital Group Ltd (ASX: TGP).
360 Capital REIT said it has commenced deploying its cash reserves again after holding cash during the COVID-19 period.
The small cap ASX share had a net tangible asset backing of $1.13 per security at 30 June 2020, so the current 360 Capital REIT share price is at a 24% discount to this value. It is currently undertaking an on-market buyback.
For the first quarter of FY21 it declared a 1.5 cents per unit distribution, which equates to a yield of around 7% at the current share price.
It said in a recent update that it is well positioned to take advantage of market volatility arising from a tapering of government stimulus and ending of the moratorium on interest payments.
Tassal Group Limited (ASX: TGR)
Tassal is the biggest fish business in Australia. It has large salmon farming operations and it also has a growing prawn division after some acquisitions.
In FY20 the small cap ASX share grew operating net profit by 13.4% to $64.2 million and operating earnings before interest and tax (EBIT) went up 9.8% to $99.8 million. That supported the dividend being maintained during the COVID-19 period. In FY20 it paid a dividend of 18 cents per share. At the current Tassal share price, that equates to a partially franked dividend yield of around 5%.
The fish business recently announced the acquisition of Billy Creek, a property with around 1,300 hectares that is next to its Proserpine prawn farm. The combination of these two properties provides the opportunities for an additional (approximately) 350 hectares of ponds, supporting a total of around 800 hectares of ponds across the wider precinct. The proximity to the Bruce Highway provides ready power availability as well as existing road infrastructure.
Nick Scali Limited (ASX: NCK)
Nick Scali is one of the largest furniture businesses on the ASX, but it’s still a small cap ASX share.
In FY20 it increased its final dividend by 12.5%, bringing the full year dividend to 47.5 cents per share. At the current Nick Scali share price that represents a grossed-up dividend yield of 7.7%.
Its net profit was flat in the last financial year. However, it’s expecting higher growth in the first half of FY21. Total sales orders for the first three months of FY21 have been up 45% on the previous year. Excluding Melbourne and Auckland, comparable store sales orders grew by 59% in the first quarter.
Online orders have increased by 47% for the first quarter of FY21 compared to the last quarter of FY20 and the company now expects the EBIT contribution from online in FY21 to be higher than previously anticipated. It’s expecting first half net profit to be 70% to 80% more than the first half of FY20.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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