There are some small ASX dividend shares that have large dividend yields.
Businesses that are smaller may have the potential to grow more because they haven’t reached their growth ceiling yet. However, some of them may be able to deliver higher levels of income because they are paying high dividend yields.
Here are two examples:
360 Capital REIT (ASX: TOT)
This real estate investment trust (REIT) invests across the entire real estate investment world, taking advantage of varying market conditions in order to find the best opportunities. It’s managed by fund manager 360 Capital Group Ltd (ASX: TGP).
The business has been busy with acquisitions and sales in recent months.
In the three months to 30 September 2020, it continued its investment strategy of buying equity stakes in real estate assets and businesses, whilst exiting the debt investments.
It recently settled on the sale of its non-core Penrith shopping centre in line with book value. A few months ago it announced that it had settled seven contracts for its Gladesville investment averaging at a 20.3% premium to the purchase price.
Over the last month the small ASX dividend share has bought a 9.18% interest in Irongate Group (ASX: IAP), a diversified REIT, for approximately $78.6 million.
It has also announced a 50% interest in PMG Funds, a New Zealand based real estate fund manager with over NZ$665 million of real estate funds under management (FUM).
360 Capital REIT said that the partnership gives it exposure to a growing funds management platform across New Zealand. It will allow 360 Capital REIT to invest in direct commercial and industrial real estate transactions in New Zealand.
Management said that the REIT remains well capitalised with no gearing and a focus on growing its real estate strategy.
360 Capital REIT is currently paying a quarterly distribution of 1.5 cents, which translates to a distribution yield of just under 7% at the current share price.
Pengana Capital Group Ltd (ASX: PCG)
Pengana is a fund manager that runs a variety of strategies including Australian share strategies, global shares and global private equity.
In the latest monthly update, Pengana said that its funds under management (FUM) was just under $3.6 billion.
The small ASX dividend share believes that there is significant further capacity in various international equity strategies. Pengana also thinks there is a major growth opportunity in the Pengana Private Equity Trust. There’s also the potential to diversify further over time by adding new strategies, according to management.
Pengana said that one of the key attractions about its business was that it has more than 20% of its FUM in listed vehicles. It says that it has good fee margins and diversified performance fees. It also says that profitability is highly leveraged to growth in FUM. It largely has a fixed operating cost base.
The company believes that a key growth opportunity is the USA expansion platform with its acquisition of a controlling stake in Lizard International.
At the current Pengana share price, it has a grossed-up dividend yield of 6.2%.