- Dividends are an excellent way to increase the margin of safety on an investment.
- Due to the pandemic, quite a few companies have delivered negative returns, but good dividends have provided some relief to the investors.
- Amid the turbulent times, many ASX-listed companies are trading at a high dividend yield of up to 8%.
While the pandemic has slashed the return expectations, investors are fleeing towards the dividend-paying companies. Investing in a healthy company with a long dividend history has been a favourite choice among the dividend lovers.
On top of that, investing in this uncertain environment is not easy, and therefore dividends can add an extra layer of the margin of safety over and above the capital appreciation.
Listed below are the ASX-listed companies that are under the spotlight with dividend yield of 4-7%. Many of them are not shying away from cheering up its shareholders with the decent dividend payouts.
1. Fortescue Metals Group Limited (ASX:FMG)
Fortescue Metals Group is one of the largest iron ore producers in Australia with the market cap of nearly A$70 billion. The company has started FY21 with 13% improvement in TRIFR to 2.1, with more than $1 billion as at Q1FY21. For FY21, the company plans to deliver 175-180mt of Iron Ore shipments.
The company’s share price has seen a sharp surge recently due to a sustained increase in the Iron Ore price. The YTD return stands at 113% with the dividend yield of 7.66%
2. IOOF Holdings Limited (ASX:IFL)
IOOF is an Australian financial services company providing services like financial advice, and portfolio management. Even during the challenging environment, the company received 37% higher demand than 2019. The funds under management increased by $529 million to $202.8 billion in the quarter ended 30 September 2020.
The YTD return stands at negative 54% for IOOF shares. However, the dividend yield has increased to 7.57% amid fall in the price.
3. AGL Energy (ASX: AGL)
AGL Energy is in the business of generating and retailing electricity and gas for both residential and commercial use. In FY20, the company recorded 12% increase in the NPAT to A$1.01 billion, with the total declared dividend of 98 cps. It also intends to deliver a special dividend in FY21 & FY22, which would take an effective payout ratio to 100.
On 14 December, AGL shares are trading at A$13.54, up 1.6% with the YTD return of negative 35.2%. The dividend yield stands at 7.35%.
4. Smartgroup Corporation Limited (ASX:SIQ)
Smartgroup offers employee management services like salary packaging services, payroll administration and novated leasing. According to the recent Q32020 business update, the fleet under management increased by 200 to 24,700 vs June quarter.
Smartgroup’s shares are trading at A$6.32 on 14 December, clocking a negative YTD return of 7.8%. The dividend yield of the company is 6.16%
5. Aurizon Holdings Limited (ASX:AZJ)
Aurizon is a freight rail transport company, based in Australia. In FY20, the company recorded A$909 million of EBIT, which was well within the guidance and 10% higher than FY19. The total dividend declared for FY20 was 27.4 cps, 70% franked.
With the dividend yield of 6.52%, the Aurizon shares are trading at A$4.2. The YTD return is negative 20.3%
6. Platinum Asset Management Limited (ASX:PTM)
Platinum Asset Management is one of the listed investment managers in Australia. The fund specialises in investing in international equities. In November, the funds under management increased to A$23.55 billion from A$21.76 billion as at 31 October 2020. The dividend payout ratio has declined from 99 in FY19 to 90 in FY20.
The share price is marginally negative for the year with a 3.8% fall. However, the dividend yield alone is 5.6%, taking the total return to positive for the year.
7. Woodside Petroleum Limited (ASX:WPL)
Woodside Petroleum is a petroleum exploration and production company in Australia and amongst the largest oil and gas producers of the country. For 2021, the company is targeting a 15% reduction in NWS cash operating cost. It is also rebalancing its investment strategy to capitalise newer opportunities.
WPL is trading at A$23.12 on 14 December. The current dividend yield stands at 5.12%.
8. Rio Tinto Limited (ASX:RIO)
Rio Tinto is the world’s second-largest metals and mining corporation and produces iron ore, copper etc. On 10 December, the company announced its maiden discovery of Ore Reserves at Jadar. The Mineral Resource comprises 55.2 Mt of Indicated Resource at 1.68% Li2O and 17.9% B2O, underlying the maiden Ore Reserve.
Due to recent iron ore price rally, the share price has also seen a surge to deliver a YTD return of more than 14%. The dividend yield is quoting around 4.9%.
9. JB HI-FI Limited (ASX:JBH)
JB Hi-Fi is a Melbourne based consumer goods retailer in the Afoustralian and New Zealand markets. Recently, the company also opened all its stores in Victoria after they were being shut down amid stage 4 restrictions. The company also clocked a strong sales growth of 27.3% in Q1FY21 in Australia, despite the closure of Melbourne stores.
Currently, the stock is quoting at a dividend yield of 4.29% concerning the current market price of A$45.27. JBH shares have also delivered a decent YTD return of 17.6%.
10. Super Retail Group Limited (ASX:SUL)
Super Retail Group operates a wide portfolio of retail brands in Australia which includes Supercheap Auto, Macpac and Rebel Sport. According to the latest trading update in October, the company has delivered a growth of 25% in the first 17 weeks of FY21 despite the Covid-19 restrictions in Melbourne and Auckland.
SUL is trading at A$10.21 during early trade hours on 14 December 2020, giving a dividend yield of 4.04% to the investors. The YTD return stands almost flat at negative 1.75%