Motley Fool Australia

3 small ASX dividend shares with big yields

ASX dividend shares

There are some ASX dividend shares that have big dividend yields.

Some businesses are quite a bit smaller than the biggest companies on the ASX. Shares like Commonwealth Bank of Australia (ASX: CBA) and BHP Group Ltd (ASX: BHP) have market capitalisations of more than $100 billion.

These stocks have much smaller capitalisations, but they still have large yields:

Adairs Ltd (ASX: ADH)

Adairs is one of the largest retailers of furniture and homewares in Australia.

Using the market capitalisation from the ASX, it’s valued at $646 million.

The ASX dividend share has a trailing grossed-up dividend yield of 4.3%. In FY21, Commsec has numbers projecting that Adairs will pay an annual dividend of $0.21 per share, equating to a forward grossed-up dividend yield of 8.1%.

In a recent trading update, Adairs said for the first 23 weeks sales had gone up 23.4% with Adairs online sales going up by 99.7%. Online sales made up 39% of total sales, compared to 20% for the same period last year.

In terms of guidance for the FY21 first half, total sales are expected to be in a range of $235 million to $245 million, representing growth of at least 31%.

Pacific Current Group Ltd (ASX: PAC)

Pacific Current is an ASX dividend share that takes strategic stakes in fund managers from around the world. One of its biggest investments is GQG.

Dean Fremder of Perpetual Limited (ASX: PPT) said when Pacific Current shares were a bit lower: “The stock’s really cheap. It is on nine times earnings. It’s growing earnings at double digits, so more than 10% a year. It’s paying a 6.5% fully franked yield. And most excitingly, we think they can pay out a much larger portion of their earnings as dividends. We see no reason, given the surplus franking credits they have on the balance sheet, they can’t be paying a 10 or 11% fully franked yield in the next 12 months. So, really excited about that one.”

In FY20 the company grew its dividend by 40% to $0.35 per share on the back of a 62% increase in the funds under management (FUM).

Looking at the first quarter of FY21, Pacific Current said that its FUM went up by another 14% to $106.4 billion, with the vast majority of the FUM growth during the period coming from GQG. In native currencies, US dollar orientated fund managers saw FUM rise by 19.3%. When converting to Australian dollars, the increase was offset by the significant appreciation of the Australian dollar against the US dollar.

Pacific is also thinking about launching a fund to manage external money and invest that capital into fund managers, where Pacific Current would also have co-investment rights.

At the current Pacific share price, it has a trailing grossed-up dividend yield of 8%.

Pengana Capital Group Ltd (ASX: PCG)

Pengana is an ASX dividend share that operates as a fund manager, it largely looks to provide services to retail investors.

At the end of December 2020, its FUM increased to $3.593 billion, up from $3.523 billion.

The fund manager operates 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. The benefit of this is that it provides a stable pool of FUM which generates stable management fees.

One of the ways that Pengana plans to grow is overseas expansion. It bought two thirds of Lizard Investors in the US, Pengana plans to help it increase its FUM whilst also transforming Lizard into a platform for managing other strategies.

Pengana management think that eventually Lizard can become the size of the Australian business.

At the current Pengana share price, it has a trailing grossed-up dividend yield of 6.7%.

These Dividend Stocks Could Be Your Next Cash Kings (FREE REPORT)

Motley Fool Australia's Dividend experts recently released a brand-new FREE report revealing 3 dividend stocks with JUICY franked dividends that could keep paying you meaty dividends for years to come.

Our team of investors think these 3 dividend stocks should be a 'must consider' for any savvy dividend investor. But more importantly, could potentially make Australian investors a heap of passive income.

Don't miss out! Simply click the link below to grab your free copy and discover these 3 high conviction stocks now.

Returns As of 15th February 2021

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends ADAIRS FPO. The Motley Fool Australia has recommended ADAIRS FPO. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

Related Articles…

Latest posts by Tristan Harrison (see all)