High-yield ASX dividend stocks could be exactly what income-seekers are looking for. With the Reserve Bank of Australia (RBA) reducing the official cash rate, Aussies may prefer to look at businesses with generous dividends rather than savings accounts.
There are currently widespread views that the RBA could decide to deliver three or four more rate cuts over the next 12 months. That could make a big difference to the attractiveness of high-yield ASX dividend stocks. But, I'd rather invest now – whilst yields are high – than wait for other investors to jump on the opportunities out there.
While I'd normally mention the business GQG Partners Inc (ASX: GQG) at a time like this, I'm going to highlight two other businesses that could deliver a large dividend and rising net profit in the medium-term.
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Shaver Shop Group Ltd (ASX: SSG)
Shaver Shop is an Australian and New Zealand retailer of male and female personal grooming products. It is aspiring to be the market leader of all things related to hair removal.
It had 124 Shaver Shop stores across Australia and New Zealand at the last count. It aims to sell a wide range of quality brands at competitive prices, supported by excellent staff product knowledge. This market position enables it to negotiate exclusive products with suppliers.
Some of the types of products the high-yield ASX dividend stock sells include electric shavers, clippers, trimmers and wet shave items. It also sells products across oral care, hair care, massage, air treatment and beauty categories.
The business has paid a very generous dividend for a number of years and it hasn't given investors a cut since it started paying a dividend in 2017. I like the company's strategy of forming exclusive partnerships with shaving brand partners, as well as its store expansion strategy across Australia and New Zealand.
The last two dividends declared by the business came to 10.3 cents per share. This translates into a grossed-up dividend yield of 11%, including franking credits.
Bailador Technology Investments Ltd (ASX: BTI)
Bailador describes itself as a growth capital fund focused on the IT sector, actively managed by an experienced team. The company is willing to both make new investments and sell positions.
There are a few different characteristics that the high-yield ASX dividend stock looks for when it's going to make an investment. They seek businesses that are run by founders, have an operating history of between two and six years, have a proven business model with attractive unit economics, have international revenue generation, have a huge market opportunity and have the ability to generate repeat revenue.
Some of its current holdings include Siteminder Ltd (ASX: SDR), DASH, Updoc, Access Telehealth, Expedition Software and Rosterfy. Therefore, Bailador has exposure to hotel management and distribution software, financial advice and investment management software, telehealth platforms, tours and activities booking software and volunteer management software.
Currently, the Bailador share price is valued at 34% discount to the post-tax net tangible assets (NTA) of $1.54 per share, while the pre-tax NTA per share is $1.65. Essentially, the NTA tells investors what the underlying value of the portfolio (reasonably) is.
The company aims to pay an annual dividend yield of 4% of the pre-tax NTA. Due to the large share price discount, it implies a fully franked dividend yield of 6.5% and a grossed-up dividend yield of 9.25%, including franking credits.
I think it's a great time to invest in both of these high-yield ASX dividend stocks, particularly Bailador.
