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Highlights
- A company can either accumulate its profit and earnings or distribute it to shareholders as dividend
- The dividend yield is the dividend paid out by a company relative to its share price
- Higher dividend yields do not always indicate attractive investment opportunities because a stock's dividend yield may be higher due to a declining stock price.
The distribution of profit by a company to its shareholders is known as dividend. Profit and earnings accumulated by a company can be either reinvested or paid out to shareholders as dividend. Dividend yield is the ratio which implies dividend paid out by a company relative to its share price.
Stocks with high dividend yields are usually lapped up by investors looking for regular income. However, investors should remember that higher dividend yields do not always indicate attractive investment opportunities because a stock's dividend yield may be higher due to a declining stock price.
Do read: CLW, PAC: Two ASX income shares with over 5% dividend yields
Having said that, let us look at three stocks from ASX that have more than 10% dividend yield.
Data source: ASX as of 20 June
Magellan Financial Group (ASX:MFG)
Magellan Group creates and safeguards wealth of its investors by investing in high quality global stocks. Enriched with a highly qualified and experienced team of investing professionals, it manages over AU$65 billion in global equity and infrastructure strategies for clients based around the world. Magellan provides a lucrative annual dividend yield of 17.96% to its customers with 75% franking.
Following are the highlights of the company in the half year ended 31 Dec 2021
Image source: © 2022 Kalkine Media®, Data source: company update
Fortescue Metals Group Ltd (ASX:FMG)
Fortescue is an iron ore company based in Australia. The company’s business encompasses integrated mining, rail, shipping, and marketing teams working together to export over 180 million tonnes of iron ore annually. Further, the company is also establishing a global portfolio of green hydrogen and green product operations.
Fortescue has a market capitalisation of about AU$57 billion and an annual dividend yield of nearly 16%.
Last month, Fortescue entered a partnership with multinational equipment manufacturer Liebherr. The partnership will see Liebherr develop and supply green mining haul trucks for integration with the zero-emission power system technologies being developed by Fortescue Future Industries (FFI) and Williams Advanced Engineering (WAE). This is a major stride towards transitioning Fortescue’s diesel mining fleet to a green mining fleet before 2030.
Platinum Asset Manager (ASX:PTM)
Platinum is an investment manager based in Australia. It focuses on international shares and offers only one core investment style. The asset manager pursues those companies whose true worth and prospects are yet to be fully recognised by the market.
In the half-year ended 31 December 2021, PTM reported a profit after tax of AU$60.0 million compared to AU$90.4 million in the previous corresponding period (pcp). It incurred losses before tax of AU$7.4 million compared to income before tax of AU$35 million in the pcp.The company’s total revenue increased by 2% compared to the pcp.
Platinum’s annual dividend yield is nearly 13% (fully franked). Shares of this company last traded at about AU$1.7 on Monday.
Also read: NHC, YAL, GRR: Three best performing ASX high-yield dividend shares
