ASX dividend shares with large dividend yields could be appealing because of the large cash payouts. There are two I'm going to write about that I'd call buys.
Some businesses deliver a lot of their returns through capital growth, while others largely do it through dividend payments.
I believe that businesses that grow earnings give investors the best chance of delivering growing shareholder returns.
If we can find businesses that pay a dividend yield of around 10%, then those ASX dividend shares could beat the market with just the passive income. Rising earnings will hopefully drive share prices higher. The below companies are ones that I think can do really well in terms of dividend income.
Shaver Shop Group Ltd (ASX: SSG)
This business has over 120 stores in Australia and New Zealand, it sells a wide variety of male and female personal grooming products – it wants to be the leader in "all things related to hair removal". It also sells various other products including oral care, hair care, massage, air treatments and beauty categories.
The high-yield ASX dividend beast is planning to keep growing its store network, which can help it grow earnings. The balance sheet is in good shape – at 31 December 2022, it had cash of $34.1 million and no debt.
The company has grown its gross profit and dividend each year since FY19. It said it has an "intention to continue to increase the dividend". As Australia's population continues to grow, I think its earnings can continue to improve.
In FY24, the ASX dividend share is projected to pay a grossed-up dividend yield of 16%, according to Commsec, which would be a huge payment. It's valued at around 8 times FY24's estimated earnings.
GQG Partners Inc (ASX: GQG)
GQG is a large fund manager on the ASX, with a market capitalisation of over $4 billion according to the ASX.
There are four main segments of its funds under management (FUM) – international equity, global equity, emerging markets equity and US equity.
The ASX dividend beast has seen impressive long-term growth of the FUM thanks to all of its major funds delivering outperformance since the start of the strategies. Money continues to flow into the fund manager, which is a boost for FUM and earnings. In the first five months of 2023, the business experienced net inflows of $5.9 billion.
It doesn't cost a lot of capital or normal expenditure to grow – the same investment team can manage an extra million or billion dollars. Funds management businesses can have a lot of operating leverage.
According to Commsec, it's going to pay a dividend yield of 10% in FY24.
