There are some ASX dividend shares that have large and consistent dividends. Some businesses regularly grow their dividends for shareholders.
In a world with low inflation and low interest rates, a large and growing dividend might be interesting.
These two businesses have sizeable expected dividend yields for the FY21 year:
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi is one of the largest ASX retail shares. It has JB Hi-Fi Australia, The Good Guys and JB Hi-Fi New Zealand.
The company has been growing its dividend each year since 2013, which is a fairly long record for the ASX.
JB Hi-Fi’s FY21 half-year result was no exception. The board increased its interim dividend by 81.8% to $1.80 per share, which represent a payout ratio of 65%.
The ASX dividend share says that its performance is underpinned by five unique competitive advantages. Its scale, the low cost operating model, quality store locations, supplier partnerships and multichannel capability.
JB Hi-Fi says that its low cost of doing business relative to retail peers is driven by productive floor space with high sales per square metre, a continued focus on productivity and minimising unnecessary expenditure, which enables the company to maintain low prices (with gross margins of around 22%).
The company saw online sales rise by 161.7% to $678.8 million. The key JB Hi-Fi Australia division saw earnings before interest and tax (EBIT) rise 57.5% and the EBIT margin climbed 214 basis points to 9.8%.
At the current JB Hi-Fi share price, it has a trailing grossed-up dividend yield of 7.3%.
Coles Group Ltd (ASX: COL)
Coles is the second largest supermarket business on the ASX behind Woolworths Group Ltd (ASX: WOW). It used to be part of Wesfarmers Ltd (ASX: WES). Wesfarmers has a track record for shareholder returns.
The supermarket business hasn’t been listed as its own entity for long, but the business is creating a track record for reliable and growing dividends.
In the latest result, being the FY21 half-year result, the ASX dividend share grew its interim dividend by 10% to $0.33 per share. That was driven by a 8.1% increase in sales revenue, a 12.1% rise in EBIT and a 14.5% increase of earnings per share (EPS) to 42 cents.
Coles said that in the first six weeks of the third quarter, sales growth was 3.3%, although there continues to be a significant variation in sales performance between states and store locations. Online sales growth has moderated to 37%.
As the business begins to cycle the COVID-19 impacts in the second half of FY21, supermarkets sales and EBIT growth are expected to face challenges relative to the prior corresponding period.
Indeed, Coles actually warned that: “Depending on COVID-19, vaccine roll out and efficacy, and other factors, sales in the supermarket sector may moderate significantly or even decline in the second half of FY21 and into FY22”.
At the current Coles share price, it has a grossed-up dividend yield of 5.5%.
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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 owns shares of COLESGROUP DEF SET, Wesfarmers Limited, and Woolworths Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.