ASX dividend shares that have yields of more than 4% could be attractive options for income.
It is tricky to find higher yields at the moment because of how low central bank interest rates are.
However, some compelling businesses might be an option to boost investment income:
Inghams Group Ltd (ASX: ING)
Inghams is a large business in the poultry sector. Readers may know the company’s products from seeing them at the supermarket.
It has been suffering from some headwinds, which may have sent the Inghams share price down by more than 10% over the last three months. Lockdowns and COVID-19 could have caused an impact to the business in the first half of FY22. There is also a question about inflation and costs, such as grain.
The business has a dividend policy target of between 60% to 80% of underlying net profit after tax. In FY21 it increased its dividend by 17.9%, paying 16.5 cents per share – this represented a dividend payout ratio of 71% of underlying net profit.
Broker Citi currently rates Inghams as a buy with a price target of $4.55. That’s a potential increase of around 30% over the next year.
The ASX dividend share is working on a number of initiatives to be more profitable including driving lower costs, enhancing yield, and reducing waste. It’s also working on improving its branded and private label products, as well as launching plant-based products.
In FY22 and FY23, Inghams is expecting to pay a grossed-up dividend yield of 7.3% and 8.4% respectively.
Pacific Current Group Ltd (ASX: PAC)
Pacific Current is a global multi-boutique asset manager that invests in other asset managers looking to grow over the long-term.
It has stakes in 15 investment outfits across the US, Europe, Asia, and Australia. Some of the names in the portfolio include GQG Partners Inc (ASX: GQG), Carlisle Management, Proterra Investment Partners, Aether, Victory Park Capital and Astarte Capital Partners.
This business continues to see its total funds under management (FUM) grow. In FY21, FUM increased 52% to A$142.3 billion. At 30 September 2021 it had reached A$150.1 billion. Excluding GQG, aggregate FUM increased 9% year on year in FY21 and another 7% in the three months to September 2021.
The rising FUM is helping increase the management fee profitability (excluding performance fees). In FY21, management fee profitability increased by 25% compared to FY20.
It’s expecting continued improvement in corporate and boutique prospects in FY22, as well as access to a new credit line and/or dedicated external pools of capital in FY22. Management have provided guidance of higher revenue and profit in FY22 even without new investments or being able to recognise a full year of earnings from GQG after it recently listed.
Ord Minnett currently rates Pacific as a buy, with a price target of $10.30. It thinks that the ASX dividend share will pay a grossed-up dividend yield of 7.3% in FY22 and 8.2% in FY23.