ASX stocks with significant grossed-up dividend yields may appeal to investors looking to boost passive income.
On 14 May, Macquarie reported its Top 10 grossed-up dividend stocks for the upcoming financial year. That is, the estimated grossed-up yield investors will receive for the next financial year if they buy the stock today (including franking credits).
Based on Macquarie's analysis, several stocks offer grossed-up yields above 10%. With a mix of small caps and large caps, there is something for everyone.
So, what are they?
McMillan Shakespeare Ltd (ASX: MMS)
McMillan Shakespeare provides salary packaging, novated leasing, disability plan management, support coordination, asset management, and complementary financial services in Australia and New Zealand. With a market capitalisation of $1.13 billion, it is outside the S&P/ASX 200 Index (ASX: XJO) and may go under investors' radar. However, according to Macquarie, investors who buy it today will receive a forward dividend yield of 8.79%. This amounts to a grossed-up yield of 12.55%, which is compelling for those after passive income.
Coronado Global Resources Inc (ASX: CRN)
Coronado Global Resources produces, markets, and exports metallurgical coal internationally. It owns 100% interest in the Curragh mining property in the Bowen Basin of Queensland. With a market capitalisation of $347 million, it is a small-capitalisation company. According to Macquarie, those who buy Coronado Global Resources today will gain a forward yield of 8.20%, which amounts to a grossed-up yield of 11.71%.
Fortescue Metals Group (ASX: FMG)
Fortescue engages in the exploration, development, production, processing, and sale of iron ore internationally and in exploring for other minerals. It is an ASX 200 stock with a market capitalisation of $51.8 billion, so it is well known amongst ASX investors. However, sometimes the best opportunities are hidden in plain sight. Macquarie projects its forward yield to be 8.05%, amounting to a grossed-up yield of 11.5%. Those wanting to bank this dividend in the coming financial year might consider buying Fortescue today.
Resimac Group Ltd (ASX: RMC)
Resimac Group provides residential mortgage and asset finance lending products in Australia and New Zealand. With a market capitalisation of $344 million, it is another small-cap stock. Macquarie projects its forward dividend yield to be 7.91%, which is 11.3% grossed up. It could be another good option for passive income-focused investors who prefer small caps.
New Hope Corporation Ltd (ASX: NHC)
New Hope is an Australian thermal coal-mining company. Its operations include New Acland Mine, Bengalla Mine, and Queensland Bulk Handling. With a market capitalisation of $3.2 billion, it sits in the ASX 200. Macquarie is forecasting a forward dividend yield of 7.65% (10.93% grossed up) for those who buy it today.
Pepper Money Ltd (ASX: PPM)
Pepper Money is a non-bank lender. It operates in the mortgage and asset finance markets in Australia and New Zealand. With a market capitalisation of $734 million, it is at the smaller end of the town on the ASX. It's also only been listed since 2021. However, for investors who buy it at today's price, Macquarie projects a dividend yield of 7.12% (10.17% grossed up).
Foolish Takeaway
Investors seeking passive income are in luck – Macquarie recently listed 6 ASX stocks that, if purchased today, they expect to deliver above 10% yields next financial year. However, their analysis does not consider total return, that is, the likelihood of capital growth. Passive income-oriented investors who also wish to preserve capital should use this list as a starting point before digging into further analysis.
