Not every business pays a dividend. Not every ASX dividend share has a big yield. But in 2022, the two ASX stocks in this article are expected to pay large dividends.
However, there is more to consider about a business than just its shareholder payments. Keeping that in mind, here are two ASX dividend shares that are expected to have very large yields this year:
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Dusk Group Ltd (ASX: DSK)
Dusk describes itself as an Australian specialty retailer of home fragrance products. It has a store network as well as a website.
Its product range is designed in-house and is exclusive to Dusk. It claims to be Australia's leading omnichannel specialty retailer focused on home fragrance products. What does it actually sell? It sells items like candles, diffusers, essential oils and fragrance-related homewares.
According to Commsec, the ASX dividend share is expected to pay a grossed-up dividend yield of 10.25% in FY22 and keep growing that dividend in FY23 and FY24.
In the first half of FY22, it generated $80 million of sales and $21.3 million of pro forma earnings before interest and tax (EBIT) despite the impact of store closures during the period. But it did manage to increase its pro forma gross profit margin to 68%, up from 67.7%.
The company continues to grow in other ways. In HY22, its store network had grown to 128 stores, an increase of six new stores. It's planning to open another four new stores by Mother's Day. That's 8th May in 2022. The Dusk rewards active members grew to 718,000.
Commsec numbers suggest the Dusk share price is valued at less than 10x FY22's estimated earnings.
Fortescue Metals Group Limited (ASX: FMG)
Fortescue is one of Australia's, and the world's, biggest iron ore miners.
When the iron ore price is elevated, Fortescue is able to generate higher profits and pay higher dividends.
In FY22, Commsec projections indicate that Fortescue is going to pay an annual dividend of $1.85 per share. That translates into a grossed-up dividend yield of 12.2%.
For the first half of FY22, the ASX dividend share paid an interim dividend of 86 cents per share, representing a 70% payout of first half net profit after tax (NPAT).
Fortescue is doing a few different things to try to maintain and grow its profit. It's getting closer to completing its higher-grade Iron Bridge project and it's pursuing other potential projects including studying the Belinga iron ore project in Gabon, West Africa.
Another focus for the business is the Fortescue Future Industries (FFI) partnership with E.ON to become Europe's largest green renewable hydrogen supplier and distributor by 2030. They are partnering to deliver up to five million tonnes per annum of green hydrogen.
FFI is the division that wants to help the world decarbonise sectors that are hard to decarbonise. It's investing to create a global portfolio of green energy projects to supply up to 15 million tonnes of renewable green hydrogen by 2030.
However, the broker Ord Minnett only rates Fortescue as a hold right now. But, it does expect that the FY22 grossed-up dividend yield could be 14% thanks to higher iron ore prices.
