Whether you’re retired or still working, shares that produce high dividend yields are a great way to generate a regular income stream. Especially if those dividends are fully franked.
In this article, let’s take a look at 2 ASX shares that are currently offering fully franked dividend yields of at least 4%. Both of these companies, in my opinion, have strong prospects for growth over the next 12 months.
Therefore by investing, not only will you be receiving a high dividend, but also the potential for further share price growth.
Accent Group Ltd (ASX: AX1)
Accent Group is a retailer and distributor of performance and lifestyle footwear. The group has over 460 stores across 11 different retail banners and has exclusive distribution rights for 12 international brands across Australia and New Zealand.
Accent has exposure to the rapidly growing active footwear market through leading brands that include HYPE DC, Platypus, and The Athlete’s Foot.
Accent has had a great run on the ASX over the past 12 months, up by 40% since this time last year. This is particularly impressive considering the struggle that many Australian brick and mortar retailers have been experiencing. A number of retail chains have had to close their doors, due to both challenging economic and trading conditions, and the growing threat of online retailers such as Amazon.
What makes Accent Group’s growth even more appealing is the 4.3% fully franked dividend yield that it currently pays. Accent shares are also trading on a fairly attractive price-to-earnings (P/E) ratio of 18.8.
For FY19, the company delivered earnings before interest, tax, depreciation and amortisation (EBITDA) of $108.9 million, up 22.5% on the prior year. Meanwhile, net profit after tax (NPAT) also came in 22.5% higher at $53.9 million.
National Australia Bank Ltd. (ASX: NAB)
Of the big four banks, I think that the NAB share price looks particularly attractive, offering a fully franked dividend of 6.3%. That’s a grossed-up return equivalent to 9%! In comparison, you’re likely going to get less than 2% in a term deposit or a high-interest savings account.
Despite the run-up in the NAB share price this year, I believe shares are still somewhat oversold, providing investors looking for additional exposure to the financial services market with a good buying opportunity.
NAB shares are also trading on a very attractive P/E ratio of 14.1, well below the market average of around 18.
I believe that NAB is well placed for strong growth over the next 12 months, particularly due to signs that the residential housing market will continue to improve. This follows on from a rise in residential sale prices from late last year across most of Australia’s major cities, especially in Sydney and Melbourne.
Additionally, NAB may also benefit from its exposure to the Australian SME market.
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Motley Fool contributor Phil Harpur has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended Accent Group. 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