There are some ASX dividend shares that have very high yields which income investors may be interested in.
It’s looking tough at the moment for anyone with cash trying to generate interest. But there are some businesses that may be able to boost the level of income.
These three ASX dividend shares have very high prospective dividend yields for FY21:
Fortescue Metals Group Ltd (ASX: FMG)
Fortescue is one of the businesses that has a very high dividend yield, for now. The iron ore miner is benefiting from high iron prices and it also has a low price / earnings ratio with a high dividend payout ratio, so the dividend yield ends up being very high.
Broker UBS likes Fortescue, though it acknowledges there are risks when it comes to the Iron Bridge project.
UBS thinks that the FY21 dividend could be as big as $4.035 per share, which would equate to a grossed-up dividend yield of 25.4% at the pre-open Fortescue share price.
The ASX dividend share increased its interim dividend by 93% to AU$1.47 after a 66% increase in the earnings per share (EPS) to US$1.33. This result came after a 42% increase in the realised price of dry metric tonne (dmt) of iron ore to US$114, which helped grow revenue by 44%.
UBS has a share price target of $25 for Fortescue Metals.
Nick Scali Limited (ASX: NCK)
The furniture business is another company which has a high dividend yield.
Broker Citi thinks that the Nick Scali share price is a buy and has a price target of $12.05 for the business. Citi thinks that consumers will keep buying things from Nick Scali because there aren’t many other options to spend money with international borders closed. However, it notes that it’ll be hard to beat the FY21 result in FY22.
Citi also noted that Nick Scali may find a potential acquisition to go after.
In the FY21 half-year result, the ASX dividend share increased its dividend by 60% to $0.40 per share, off the back of a 99.5% increase of the underlying EPS to $0.50.
Citi believes that Nick Scali could pay a dividend of $0.80 per share in FY21, which would translate to a grossed-up dividend yield of 10.9%.
Waypoint REIT Ltd (ASX: WPR)
Waypoint is a real estate investment trust (REIT) that solely owns service stations and convenience retail properties.
The business generated a 4.25% increase of its distributable EPS to 15.15 cents in FY20, whilst the net tangible assets (NTA) per security grew by 8.7% to $2.49.
The ASX dividend share invested $32.5 million across five acquisitions during the year. It also spent $18.8 million across 12 development projects with six completed during the year and six targeted for the first half of FY21.
Waypoint REIT’s board recently decided to reduce its target gearing range from 30% to 45%, to 30% to 40% to better reflect the board’s view on a sustainable gearing range for the business. It had a gearing ratio of 29.4% at 31 December 2020.
Broker Morgans likes Waypoint and said the 99.9% collection rate of rent for FY20 showed how resilient the business is.
In FY21, Morgans has projected a dividend of 15.7 cents per security, which equates to a distribution yield of 6.5%.
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Returns As of 15th February 2021
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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