There are some S&P/ASX 200 Index (ASX: XJO) dividend shares that may be good businesses to consider for income.
A few of them have a record of growing their ordinary dividend over the last few years.
The below two businesses have quite high yields, are rated as buys and are growing their underlying companies:
Magellan Financial Group Ltd (ASX: MFG)
Magellan is a large fund manager that predominately focuses on investing in large global businesses.
It's currently rated as a buy by the broker Morgans which has a price target of $58.05.
The broker has noted the growth of funds under management (FUM) for Magellan since the end of FY20.
At 30 June 2021, it ended FY21 with total FUM of $113.9 billion. That was an increase from $109.9 billion in May 2021, $101.4 billion in December 2020 and $97.2 billion at 30 June 2020.
Average FUM for FY21 was $103.7 billion, up 8.6% over the average FUM for FY20.
The FUM is an integral part of generating management fees for Magellan. Indeed, Morgans believes that Magellan can grow its earnings in FY22 with the growth of FUM as well as the new initiatives such as retirement income offering Futurepay.
Magellan also said that in June 2021 it experienced net outflows of $351 million. But it is entitled to $30 million of performance fees for FY21.
Morgans expects the ASX 200 dividend share to pay a dividend of $2.31 per share in FY22. That translates to a partially franked dividend yield of 4.35%.
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi has a few different segments – JB Hi-Fi Australia, JB Hi-Fi New Zealand and The Good Guys.
The business is currently rated as a buy by the broker Credit Suisse, with a price target of $57.60 on the business.
Credit Suisse pointed out that whilst Aussies are still spending a lot on retail, the recent restrictions in various states adds to uncertainty.
The broker isn't expect as strong of a year in FY22 as FY21, it believes JB Hi-Fi can have a good year in FY22.
JB Hi-Fi recently said that its FY21 sales momentum was strong, with demand for consumer electronics and home appliance products. Total sales went up 12.6% to $8.9 billion, earnings before interest and tax (EBIT) rose 53.8% to $743.2 million and net profit after tax (NPAT) went up 67.4% to $506.1 million.
The ASX 200 dividend share said that gross margins were well managed with strong improvements in gross margins in all businesses. This gross margin improvement, combined with disciplined cost control and strong sales growth, drove "significant operating leverage".
According to Credit Suisse, JB Hi-Fi is predicted to pay a fully franked dividend yield of 4.6% in FY22. At the current JB Hi-Fi share price, it's valued at 14x FY22's estimated earnings.
