For example, if an ASX dividend share had a starting dividend yield of 7% and the share price fell 10% then the dividend yield becomes 7.7%. That'd be a good payout in my eyes.
With that in mind, let's look at three businesses that could pay a very large yield.
Centuria Office REIT (ASX: COF)
Investors can debate about what the underlying assets are worth of this real estate investment trust (REIT). We have already seen the Centuria Office REIT share price fall over 50% from September 2021.
It's still making quite a lot of rental profit, with an occupancy rate of around 97% and a weighted average lease expiry (WALE) of 4.2 years for FY23. It had a weighted average capitalisation rate of 6%, but due to the large discount to the net tangible assets (NTA), the distribution yield for FY24 is expected to be much higher.
In FY24 it's expected to generate funds from operations (FFO) – cash net rental – of 13.8 cents per unit and pay a distribution per unit of 12 cents. That puts the current Centuria Office REIT share price at 9 times FY24's potential rental profit, as well as a forward distribution yield of 9.7%.
Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is a retailer that sells a wide variety of male and female hair removal products. It has a sizeable store network and is looking to grow its store network, increase its exclusive product sales and it has grown its annual dividend per share each year since it started paying a dividend in 2017.
The FY23 dividend was increased by 2% to 10.2 cents per share, despite the difficult trading conditions. The ASX dividend share has previously said that it wants to continue to grow the dividend for shareholders.
Using the Commsec estimate of just 9.7 cents per share for FY24, this represents a possible grossed-up yield of 13.9%.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador is a company that invests in other technology businesses that are at the expansion stage of their growth journey. It tries to find businesses with recurring revenue and have a big growth runway.
The business has committed to a 4% dividend yield on its pre-tax net tangible assets (NTA). But, due to the fact that the Bailador share price is trading at an attractive double-digit discount to the pre-tax NTA, the prospective dividend yield is even bigger.
Using the update for August 2023, we can use the pre-tax NTA figure of $1.77 to work out that the possible grossed-up dividend yield is 8.1%. That's a pretty high yield considering it's from a tech business.