There are some ASX dividend shares that are small but offer big income yields.
Let’s get to the details of those businesses:
Pengana Capital Group Ltd (ASX: PCG)
According to the ASX, Pengana has a market capitalisation of $168 million.
Pengana is a fund manager that focuses on retail investors. At the end of October 2020 it had funds under management (FUM) of $3.3 billion.
It runs a variety of investment strategies – Australian multi-caps, Australian small caps, global multi-caps, global small caps and global private equity.
Pengana says that it has a sticky and loyal client base of financial advisors, retail and high net worth individuals with more than 20% of FUM in listed vehicles, which provides a stable pool of FUM.
The fund manager has been investing for growth over the past few years, with these opportunities now poised to generate upside over the medium term according to management.
In early 2020 the ASX dividend share acquired a 67% economic interest in Lizard Investors in the US. Pengana aims to help raise additional FUM for the ‘Lizard Global Small Cap Strategy’ as well as transform Lizard into a platform for the management of other strategies. Lizard intends to launch at least two more strategies over the next year. Management believe there is potential to build a business over the longer term that rivals the scale of Pengana’s Australian business.
At the current Pengana share price it offers a trailing grossed-up dividend yield of 7%.
Propel Funeral Partners Ltd (ASX: PFP)
According to the ASX, Propel has a market capitalisation of $299 million.
It’s the second largest funeral operator behind InvoCare Limited (ASX: IVC). Propel has a focus on regional funerals, though it is trying to expand into metropolitan areas as well.
According to data provided by the Australian Bureau of Statistics (ABS) death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050.
In FY20 the ASX dividend share grew its revenue by 16.5% to $110.8, with volumes up 17.6% to 13,300 and the average revenue per funeral up 1.6% to $5,672. Operating earnings before interest, tax, depreciation and amortisation (EBITDA) rose 36.4%, operating net profit grew 6.5% to $14.2 million and it paid a fully franked dividend of 10 cents per share.
Based on the current Propel share price, it has a trailing grossed-up dividend yield of 4.8%.
Nick Scali Limited (ASX: NCK)
According to the ASX, Nick Scali has a market capitalisation of $742 million.
Nick Scali is one of the largest furniture businesses in Australia. There has been elevated demand for products near the end of FY20 and into FY21.
Total sales orders for the first three months of FY21 have been up 45% compared to the previous year and this trend continued through October. When excluding stores closed in Melbourne and Auckland due to COVID-19, comparable store sales orders grew by 59% in the first quarter. Online orders increased by 47% in the first quarter of FY21 compared to the last quarter of FY20.
The ASX dividend share’s elevated level of sales orders led to a revision of the net profit forecast of FY21, increasing to an expected rise of 70% to 80%.
Nick Scali funds its dividend from its annual profit. In FY20 Nick Scali paid an annual dividend of 47.5 cents per share, which equates to a trailing grossed-up dividend yield of 7.3%.
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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has recommended InvoCare Limited and Propel Funeral Partners Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.