3 ASX dividend shares with yields above 5%

The 3 ASX dividend shares in this article have yields of more than 5%. One of them is furniture business Nick Scali Limited (ASX:NCK).

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There are some ASX dividend shares that have yields of more than 5%.

Higher yields may be attractive to some income-seeking investors that are struggling to find yield.

Here are some examples of businesses with yields of more than 5%:

Tassal Group Limited (ASX: TGR)

Tassal is Australia’s largest fish business. It has a large salmon segment and also a steadily-growing prawn division.

According to the ASX, Tassal has a market capitalisation of $721 million. At the current Tassal share price, it has a grossed-up dividend yield of almost 6%.

In FY20 the company generated earnings before interest and tax (EBIT) growth of 12.7% to $99.8 million and 13.3% growth of operating net profit after tax (NPAT) growth of 13.3% to $64.2 million. Statutory profit also went up 18.3% to $69.1 million. It was in this result that Tassal’s board decided to maintain its annual dividend at $0.18 per share.

A couple of months ago Tassal announced it was building on its prawn growth strategy after it acquired Billy Creek, a 1,300 hectare property which was next to its existing Proserpine prawn farm.

The combination of the two prawn properties provides an opportunity for an additional 350 hectares of ponds, supporting a total of circa 800 hectares of ponds across the wider precinct. Having two neighbouring properties means there is likely to be substantially lower capital investment required at the fish farms and material unit cost benefits and asset synergies such as processing, hatchery and management costs.

Pacific Current Group Ltd (ASX: PAC)

Pacific Current describes itself as a global multi-boutique asset management business committed to partnering with exceptional investment managers. It combines capital, with specific economic structures, with strategic business development to help businesses grow.

According to the ASX, Pacific Current has a market capitalisation of $322 million. At the current Pacific Current share price it has a grossed-up dividend yield of 7.9%.

In FY20 its funds under management (FUM) grew by 62% to $93 billion. Its underlying earnings per share (EPS) went up 18% to $0.51 and the dividend per share jumped 40% to $0.35.

In the three months to 30 September 2020, Pacific Current’s FUM went up 14% to $106.4 billion which was predominately thanks to GQG.

Aside from investing in more managers, such as the recent Astarte Capital Partners investment, the ASX dividend share is planning for growth by thinking about launching a private fund to invest alongside Pacific Current – the company would receive management fee revenues from the fund and co-investment rights.

Nick Scali Limited (ASX: NCK)

Nick Scali is a furniture retailing business. Every year, Nick Scali imports more than 5,000 containers of leather and fabric lounges as well as dining room and occasional furniture.

According to the ASX, Nick Scali has a market capitalisation of $878 million. At the current Nick Scali share price it has a grossed-up dividend yield of 6.3%.

FY20 was disrupted by COVID-19. There was negative same store sales of 6.7%, causing sales revenue to decline by 2% to $262.5 million. However, the underlying EBIT margin improved by 90 basis points to 23.2% which helped maintain underlying net profit after tax at $42.1 million. The operating cash flow before interest and tax grew by 22.6%.

In FY20, Nick Scali decided to grow the final dividend by 12.5% to 22.5 cents per share, bringing the full year dividend to 47.5 cents – an increase of 5.6%.

The ASX dividend share announced a week ago that it’s expecting unaudited net profit after tax for the six months to 31 December 2020 to be $40.5 million, up approximately 100% compared to the prior corresponding period. Total written sales orders went up 45% in the first quarter and second quarter growth is 58% after the reopening of Melbourne stores.

The sales order book was at an all time high at 31 December 2020, which is expected to turn into “material” revenue and profit growth in the second half of the financial year.

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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. 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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