There are some ASX dividend shares out there that have high dividend yields but have paid consistent or even growing dividends, including through COVID-19.
Some investors may be looking for higher yields with the Reserve Bank of Australia (RBA) interest rate being so low.
Here are some examples:
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi is a large retailer of phones, computers, appliances and other devices and accessories.
The company played its part in helping people get ready to learn and work at home during the difficult COVID-19 lockdown periods. It may also have benefited from the government stimulus.
In FY20, JB Hi-Fi achieved 11.6% growth of sales, earnings before interest and tax (EBIT) went up 30.5% and net profit rose by 33.2%. It was this growth that funded the 33.1% growth of the dividend to $1.89 per share.
The ASX dividend share has a trailing grossed-up dividend yield of 5.3% at the current JB Hi-Fi share price.
JB Hi Fi’s growth has continued into the first quarter of FY21, with JB Hi-Fi Australia sales growth of 27.3%, JB Hi-Fi New Zealand sales declined by 2.5% and the The Good Guys sales growth was 30.9%.
Nick Scali Limited (ASX: NCK)
Nick Scali is one of the largest retailers of furniture in Australia.
The company delivered flat profit growth in FY20 – whilst sales revenue fell 2.1% to $262.5 million, net profit after tax (NPAT) was $42.1 million, the same as the prior corresponding period. This was achieved by the EBIT margin increasing by 90 basis points to 23.2%.
Nick Scali increased its FY20 final dividend by 12.5% on the back of the strength of its sales orders for the first half of FY21. That brought the Nick Scali full year dividend to 47.5 cents per share.
The ASX dividend share has a trailing grossed-up dividend yield of 6.3%.
Nick Scali is expecting a lot more growth in the FY21 first half. It recently provided guidance that it’s expecting net profit after tax (NPAT) for the six months to 31 December 2020 to be $40.5 million, up approximately 100% on the underlying profit from the prior corresponding period. Total written sales orders grew by 45% in the first quarter and grew 58% in the second quarter.
The sales order book was at an all-time high at 31 December 2020 and this is expected to translate to material revenue and profit growth in the second half of FY21.
Nick Scali continues to add more stores to its network in Australia and New Zealand to increase its footprint and potential customer base.
Rural Funds Group (ASX: RFF)
Rural Funds is a farmland real estate investment trust (REIT) that owns farm types including cattle, vineyards, almonds, macadamias and cropping (sugar and cotton).
The agricultural landlord leases its farms to a variety of high-quality tenants that are among the biggest of their industry in Australia. Examples are: Select Harvests Limited (ASX: SHV), Treasury Wine Estates Ltd (ASX: TWE), Olam, JBS and Australian Agricultural Company Ltd (ASX: AAC).
All of the contracts with these tenants are long-term and have rental growth built into them. That growth is either a fixed 2.5% annual increase, or it’s linked to CPI inflation, plus occasional market reviews.
The ASX dividend share also has a strategy of investing some of its rental profit each year into farm improvements to boost the value and rental potential of the properties. This has worked particularly well with cattle properties in recent years.
These two strategies are a large reason why Rural Funds has a goal of increase the distribution by 4% each year.
In FY21 Rural Funds plans to pay a higher distribution of 11.28 cents per unit, equating to a distribution yield of 4.5%.
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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Treasury Wine Estates Limited. 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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