On the ASX share market, we can find businesses with high dividend yields, perhaps as high as 10% or more.
The average return of the ASX share market over the long-term has been around 10%. How great would it be to receive that level of return just from the cash payments?
Of course, higher yields do come with their risks. That yield may be high because investors are expecting the business' profit and payout to reduce sooner rather than later. Or, the yield could be really high because the dividend payout ratio is unsustainably high.
The following two businesses currently offer yields above 10%.
I don't know what size the payouts will be in the coming years, but I expect the dividend yields will remain very high for the foreseeable future, keeping in mind the payout could be reduced somewhat from where it is today.
Let's find out about those two businesses.
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Centuria Office REIT (ASX: COF)
This business is a real estate investment trust (REIT) that owns office properties across Australian metropolitan locations.
The share price has suffered a significant decline over the last few years because of the headwinds of work-from-home and higher interest rates.
However, it's still generating plenty of rental income and is signing new leases. In the FY26 third-quarter update, it reported that during the period, 5,742sqm of lease terms were agreed across 11 transactions including 2,263sqm of new leases and 3,479sqm of renewals with the majority of these transactions in Brisbane.
Pleasingly, the business reported a re-leasing spread of 8.6%, with strong rental growth from the Fortitude Valley and Hamilton assets.
The ASX share's portfolio currently has a four-year weighted average lease expiry (WALE), with a 90% portfolio occupancy, which I'd view as solid statistics, considering all of the factors going on.
Additionally, it also reported it has refinanced $1 billion of debt refinancing across its debt book, resulting in a 30 basis point (0.3%) debt margin reduction and an extension of the weighted average debt expiry from 2.6 years to 4.3 years.
The business highlights limited supply of new office space, with there being a "significant disconnect between replacement costs and current valuations".
The ASX share also noted that the "widening gap of economic rents to prevailing market rents not only prohibits feasible office development but provides ample room for current market rents to continue to grow and underpin future valuations."
Its expected FY26 distribution of 10.1 cents per security translates into a dividend yield yield of around 11%.
WAM Microcap Ltd (ASX: WMI)
WAM Microcap is a listed investment company (LIC) that invests in small ASX shares with big growth potential.
Any sized business can produce returns, but the smaller we go down the market capitalisation list, the less-researched the stocks are and the better potential they have to produce stronger strong returns.
Past performance is not a guarantee of future returns of course, but WAM Microcap's portfolio has returned an average of 14.2% since its inception in June 2017, before fees, expenses and taxes. Those returns have been large enough to pay a very sizeable dividend.
It expects to slightly increase its annual dividend per share to 10.7 cents per share. That translates into a grossed-up dividend yield of 10.75% from the ASX share.
Of the two names I've highlighted, I'd rather buy WAM Microcap because it's increasing its payout and it offers diversification. But, the REIT could be significantly undervalued at this level.
