There are a number of ASX dividend shares that have dividend yields of more than 4%.
But, just because a business pays a dividend doesn't automatically make it worth owning for income.
Some brokers have rated businesses with higher yields as buys, such as these two:
Nick Scali Limited (ASX: NCK)
Nick Scali is a large retailer of furniture in Australia. It has a growing network of stores in Australia and New Zealand. At the time of the FY21 result release, it had 61 showrooms across Australia and New Zealand with a long-term target of 85.
The business had a bumper year in FY21, with sales revenue growth of 42.1% and underlying net profit growth of 100% to $84.2 million.
Online was a small, but rapidly growing, contribution to the result. Online written sales orders for FY21 were $18.3 million compared to $3 million in FY20. The earnings before interest and tax (EBIT) contribution from the online channel for FY21 was $8.8 million, compared to $0.6 million in FY20.
Whilst the business recently reported that FY22 first quarter revenue was in line with the FY21 first quarter, October trading has been "buoyant".
The ASX dividend share also recently completed the acquisition of Plush, which comes with a network of 46 showrooms across Australia. In FY21, Plush generated $160 million of revenue and $27 million of underlying earnings before interest, tax, depreciation and amortisation (EBITDA).
Citi currently rates Nick Scali as a buy, with the Plush purchase being a good deal. The broker thinks Nick Scali will pay a grossed-up dividend yield of 5.1% in FY22 and 6.3% in FY23. It has increased its dividend every year since 2013.
JB Hi-Fi Limited (ASX: JBH)
JB Hi-Fi is one of Australia's largest electronic and appliance retailers with both its JB Hi-Fi and The Good Guys businesses.
It has also increased its dividend every year since 2013.
FY21 was a bumper year for JB Hi-Fi too, with total sales rising 12.6% to $8.9 billion and net profit after tax (NPAT) rising by 67.4% to $506.1 million. The business focused on its margins over the year and benefited from improvements across the business.
In the ASX dividend share's recent annual general meeting (AGM) presentation, it said that it is underpinned by five unique competitive advantages: scale, low cost operating model, quality store locations, supplier partnerships and multichannel sales capability.
Looking at the dividend, JB Hi-Fi said the board will continue to regularly review the group's capital structure with a focus on maximising returns to shareholders and maintaining balance sheet strength and flexibility.
Citi rates JB Hi-Fi as a buy, with a price target of $53. The broker thought the FY22 first quarter was a decent start to the year. JB Hi-Fi Australia sales fell 7.5% in the first three months of FY21, whilst The Good Guys sales were down 5.6%.
The broker thinks households will keep spending on their homes in FY22.
Citi thinks that JB Hi-Fi will pay a grossed-up dividend yield of 6.5% in FY22 and 5.8% in FY23.
