If you think that the largest dividends available on the ASX All Ordinaries Index (ASX: XAO) are from the ASX banks, think again. While the likes of Westpac Banking Corp (ASX: WBC) and ANZ Group Holdings Ltd (ASX: ANZ) are currently offering fully-franked dividend yields above 6% right now, they are by no means the highest-yielding All Ords shares on the ASX today.
In fact, some ASX All Ords shares are offering yields more than triple that. But that doesn't mean they will turn out to be screaming buys today though.
If you think a 6% yield is attractive, then no doubt the Horizon Oil Ltd (ASX: HZN) share price will draw your eye. Right now, this small ASX All Ords oil share offers a trailing dividend yield of 14.4%. And that's after the 6% or so jump we have seen with this company's shares this Monday.
But that's just the start.
What are the highest-yielding ASX All Ords shares offering today?
We also have Abacus Group (ASX: ABG) to look at. Abacus shares offer investors a dividend yield of 16.88% right now.
There's the BSP Financial Group Ltd (ASX: BFL) share price to consider as well. At present, BSP shares have a dividend yield of 18.1% on the table.
That's topped by coal share Yancoal Australia Ltd (ASX: YAL). Today, Yancoal shares are displaying a dividend yield of 21.62%. That's almost mirrored by the Base Resources Ltd (ASX: BSE) share price, with its yield of 22.7%.
It gets even better.
Sunland Group Ltd (ASX: SDG) shares are exhibiting a dividend yield of 32.98% at present. And not to be outdone, Terracom Ltd (ASX: TER) shares are at the top of the ASX All Ords pile right now when it comes to dividend yield, displaying a frankly ridiculous yield of 44.49% today.
I'm sure that was a lot to take in. The prospect of receiving a cash yield of 44.49% on your money every year is a salivating prospect to be sure.
But, as I'm sure you're sensing, there are a lot of caveats here to discuss.
When is a dividend too good to be true?
A company's dividend yield reflects the past, not the future. No ASX All Ords share is under any kind of obligation to continue one year's dividend the next. It could double it, halve it or eliminate it altogether. A company's dividends from year to year are entirely at the discretion of its management.
Let's look at Terracom's dividend as an example. The first thing to note is that Terracom's monstrous 44.49% dividend yield is no mistake. Over the past 12 months, the ASX coal share has paid out two dividends, worth 3 cents and 7.5 cents per share respectively. That total of 10.5 cents per share gives Terracom a trailing dividend yield of 44.49% at the current share price of 47 cents.
However, a company's dividend yield is just as dependent on its share price as its raw dividends per share. And a large contributor to this massive dividend yield is the Terracom share price's near 55% loss over the past 12 months. The lower an ASX All Ord's share price, the higher its trailing dividend yield will be.
ASX resources and energy shares in particular have nororiously volatile dividends. That's because their ability to fund their dividends is entirely dependent on external factors – namely the prices of the commodities they sell.
It's clear that investors are expecting coal prices to come down significantly from the record highs we have seen over the past two years. That's why Terracom joins Yancoal in having both high trailing dividend yields, and huge share price losses over the past 12 months.
Foolish takeaway
If you sift through the shares listed above, you'll probably find the good reason why the markets are pricing these companies at low levels right now, which is helping to push their dividend yields to the rather implausible levels we are seeing. It's a good indication that most investors aren't expecting the recent dividends we have seen with these companies to continue for much longer.
Now, it's entirely possible that the markets are getting at least one of these companies' prospects wrong, and that investors will continue to enjoy huge income from any of these shares.
But investors have to ask themselves what they know that the market doesn't. There's a high chance that buying into these shares right now is nothing more than a dividend trap.
