Getting a yield of more than 9% on an investment seems way too good to be true these days, with interest rates at record lows and all.
Forget cash savings and term deposits for one – you would struggle to get 2% in interest these days, let alone 9%.
Government bonds are not much better – the current 10-year Government bond yield is just over 1% at the time of writing. That doesn’t even cover inflation, let alone provide you with a real return.
With property prices on the move upwards again, that leaves only ASX dividend shares as a real option for achieving a 9% yield.
Luckily, I’ve found 2 ASX shares that offer just that today.
National Australia Bank Ltd (ASX: NAB)
The NAB share price has spent the last few months in virtual freefall – collapsing from nearly $30 a share in September to today’s price of $24.81 (a 17% drop in 4 months). The good news? NAB shares now offer a starting yield of 6.7%, which grosses-up to 9.57% if you include the value of NAB’s full franking credits. That’s assuming that NAB’s freshly-trimmed dividend payout of $1.86 per annum continues as well.
Although there are still issues facing the ASX banking sector as a whole (and I wouldn’t rule out the possibility of further dividend cuts in 2020), I still think this kind of yield is almost too good to pass over, especially if you’re an income-focused investor.
WAM Capital Ltd (ASX: WAM)
WAM Capital is a listed investment company (LIC) that focuses on small- to mid-cap ASX shares. It has managed an impressive performance history since its inception in 1999, returning around 16.8% per annum on average (before fees) since then.
A large part of these returns has been fully franked dividend payments. WAM Capital has been raising its dividend consistently since the GFC over a decade ago. Today, WAM shares are offering a 6.77% trailing yield, which comes in at 9.67% grossed-up. Although WAM shares usually trade at a premium to the value of their underlying securities these days, this is arguably justified for such an impressive yield.
These 2 ASX dividend shares demonstrate how shares can offer some of the best yields on cash you can get today. Although there are always risks with ASX shares, I think income investors have 2 compelling income options with these dividend payers today.
The post 2 ASX dividend shares with income yields over 9% appeared first on Motley Fool Australia.
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Motley Fool contributor Sebastian Bowen owns shares of National Australia Bank Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020