2 ASX dividend shares with massive yields over 8% today

Fortescue Metals Group Limited (ASX: FMG) is one of 2 ASX dividend shares on offer today with a yield of 8% or higher. Bargain or bin?

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man handing over wad of cash representing ASX retail capital return

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Finding an ASX dividend share offering a yield of 4% or more today is not too difficult. You can look to Telstra Corporation Ltd (ASX: TLS), JB Hi-Fi Limited (ASX: JBH) or Super Retail Group Ltd (ASX: SUL) for that kind of dividend.

But an 8% yield or higher? That is a far rarer creature. Often when an ASX share gets priced with a dividend of more than 8%, it can be a cause of concern. After all, most investors wouldn’t leave a yield like that on the vine without good cause. But the following 2 ASX dividend shares indeed offer a yield of that magnitude. So let’s dig into what’s on offer here.

2 ASX dividend shares with yields of 8% today

Fortescue Metals Group Limited (ASX: FMG)

After an incredible 2020 which saw the Fortescue share price run-up more than 100%, 2021 has been a bit of a disappointment for this ASX mining giant. Since the start of the year, Fortescue shares have lost around 16% of their value. But that loss has pushed the trailing dividend yield on Fortescue shares to new heights. It is currently standing at 11.88%, or a whopping 16.97% grossed-up.

While that gigantic number sinks in, let’s remember that Fortescue’s last 2 dividends came in at $1.47 per share (paid out on 24 March) and $1 per share (paid out on 2 October 2020) respectively. That was a gargantuan increase on the previous two payouts of 76 cents (April 2020) and 24 cents (October 2019).

The massive increase in dividends has been funded by sky-high iron ore prices, which even today are sitting above US$170 a tonne. As an iron ore miner, Fortescue might only be able to keep the floodgates open as long as the iron price holds up. So it will be interesting to see where Fortescue’s 2021 final dividend lands later this year.

AGL Energy Limited (ASX: AGL)

AGL has been one of the ASX’s worst-performing blue chips over the past 5 or so years. Back in 2017, AGL shares were trading as high as $27.70 each. Today, AGL is currently sitting at $9.23, 66.7% off of those highs, after falling to a new 16-year low of $9.15 earlier today. Ouch. Investors have evidently not reacted well to AGL’s recently announced plans to separate its electricity generation and retailing businesses. 

However, that share price fall has also pushed AGL’s trailing dividend yield to a substantial 8.88%. Dividend investors might be comforted that AGL last year committed to paying out 100% of its earnings as dividends until FY2023. If the company keeps this commitment, it should continue to ensure a robust yield going forward. But with AGL’s substantial writedowns last year, and ongoing uncertainly over the economics of the Australian electricity market, it’s no surprise investors don’t seem to be in much of a hurry with this one. 

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Motley Fool contributor Sebastian Bowen owns shares of Telstra Limited. The Motley Fool Australia owns shares of and has recommended Super Retail Group Limited and Telstra 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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