3 small ASX dividend shares with large yields

The 3 ASX dividend shares in this article are small businesses, but they have large dividend yields which can give a boost to income.

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The three ASX dividend shares in this article are relatively small in size, but they have large dividend yields.

Here they are:

Baby Bunting Group Ltd (ASX: BBN)

Baby Bunting is the largest retailer of products for babies and small children. It sells a variety of items like prams, toys, clothes and car seats. According to the ASX, it has a market capitalisation of $554 million.

Its FY20 dividend per share was essentially double the size of the dividend from FY18. FY20 saw Baby Bunting deliver total sales growth of 11.8% to $405.2 million. Whilst comparable store sales growth was 4.9%, online sales growth was much higher at 39.1%.

Baby Bunting demonstrated economies of scale as its margins increased. The gross profit margin increased by 120 basis points to 36.2%. Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) grew by 24.1% to $33.7 million and underlying net profit after tax (NPAT) rose 34.1% to $19.3 million.

This growth allowed the ASX dividend share to grow its FY20 dividend by 25% to 10.5 cents per share. At the current Baby Bunting share price it offers a grossed-up dividend yield of 3.5%.

In the first six weeks of FY21, Baby Bunting saw same store sales growth of 20% – excluding Victoria same store sales went up 28.7%.

Pacific Current Group Ltd (ASX: PAC)

This business partners with quality fund managers and helps them with capital (by taking a stake) as well as helping with growing the business.

According to the ASX, Pacific Current has a market capitalisation of $315 million.

As Pacific's funds under management (FUM) and earnings grow, then it is able to fund higher dividends.

In FY20 it reached funds under management (FUM) of $93.3 billion at 30 June 2020. This was an increase of 52% when excluding the boutiques sold and acquired during the year. The asset manager GQG grew its FUM from US$25.1 billion to US$44.6 billion.

An 18% increase in underlying earnings per share (EPS) to $0.51 in FY20 allowed the board to increase the annual total dividend by 40% to $0.35 per share.

The ASX dividend share reported that in the three months to 30 September 2020 it saw total FUM go up by 14% to AU$106.4 billion. The vast majority of the FUM growth in the period came from GQG.

Pacific Current CEO Paul Greenwood said: "COVID-19 has certainly been disruptive to institutional fundraising and investor demand." However, he went on to say at the time (at the end of October 2020) that it was still a long way from pre-pandemic levels of activity.

At the current Pacific share price, it has a trailing grossed-up dividend yield of 7.8%.

EQT Holdings Ltd (ASX: EQT)

This business is an independent specialist trustee company offering trustee and fiduciary services to private and corporate clients. According to the ASX it has a market capitalisation of $315 million. 

In FY20 the company saw funds under management, administration and supervision rise by 19% to $101 billion. This helped offset the downturn in the equity market, according to the company.

It grew revenue by 3.2% to $95.4 million. Net profit before tax fell by $1 million to $30.3 million. Underlying EPS declined by 5.5% to 102.66 cents.

Managing director Mick O'Brien said: "Our strategy of investing for growth is bearing fruit, with significant new business obtained during the adding, adding a range of new, high-quality clients. All of the areas of the business performed well and would have delivered even stronger results were it not for the equity market downturn.

"We have established businesses that are well suited for these challenging times, and we have a number of newer growth businesses, a pipeline of opportunities and a strong balance sheet."

In FY20 it maintained its annual dividend per share at 90 cents, which equates to a trailing dividend grossed-up dividend yield of 4.7%.

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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