When it comes to buying blue-chip ASX shares for dividend income, Metcash Ltd (ASX: MTS) is often overlooked in favour of its larger and more famous rivals. But while the likes of Coles Group Ltd (ASX: COL), Woolworths Group Ltd (ASX: WOW) and Wesfarmers Ltd (ASX: WES) may be more popular with ASX investors, Metcash appears to have a lot more to offer income investors right now.
Metcash may not be a household name. However, most Australians would be quite familiar with the store networks that they help manage and supply to. These most prominently include IGA and Mitre 10, but also Cellarbrations, FoodWorks, and Thirsty Camel.
This makes Metcash one of the ASX's most prominent consumer staples stocks, which have long been favourites of dividend investors thanks to their defensive characteristics.
But let's get into the Metcash dividend.
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Do Metcash shares really yield 6% right now?
At the time of writing, Metcash is trading at $3.12 a share. At this pricing, this ASX dividend stock is trading on a trailing dividend yield of 5.76%.
That yield derives from the last two shareholder payments that Metcash has doled out. The first of those was the final dividend worth 9.5 cents per share from August last year. The second was the interim dividend, worth 8.5 cents per share, that investors bagged in January of this year.
Both dividends came with full franking credits, as is Metcash's habit.
Metcash has also flagged that its; next final dividend, due in August this year, will be kept steady at 9.5 cents per share.
Together, the two dividends that Metcash owners have enjoyed over the past 12 months give this company that trailing yield of 5.76%. That's significantly more than what any of its larger and more popular rivals are offering right now, so income investors may wish to take note.
It is true that no trailing dividend is a reliable indicator of what a company will pay out going forward. It only ever reflects the past, it doesn't predict the future.
Saying that, income investors can take comfort that Metcash has already given a heads-up for its next payout. So one could argue that investors will enjoy at least some of the current dividend yield if they buy Metcash shares today.
What do the experts reckon?
Zooming out, the future is more uncertain. However, last month, my Fool colleague covered the views of an ASX broker on Metcash. As we discussed at the time, Shaw and Partners' Jed Richards did say this:
While growth is modest, [Metcash's] defensive characteristics and reliable income stream support a hold position. It remains well positioned to benefit from steady consumer demand.
No doubt investors will be hoping that Richards is on the money there, at least from an income perspective. But there's no doubt that Metcash is one of the S&P/ASX 200 Index (ASX: XJO)'s most eye-catching income stocks right now.
