With the Reserve Bank of Australia cutting the official cash rate to an all time low this month, it’s unlikely your term deposit can continue to meet your income needs.
A well-diversified portfolio of dividend paying ASX shares can help ensure your income requirements are met whilst still providing you with investments that have the potential for capital growth.
Of the 500 companies that made up the All Ordinaries Index last year, 343 paid a dividend to shareholders. Below, I take a look at 5 companies, all of which trade with a trailing dividend yield of at least 4% at current prices.
Commonwealth Bank of Australia (ASX: CBA)
CBA is Australia’s largest bank with a market cap of nearly $140 billion. The CBA share price has remained in a range between $70-$90 for much of the last 4 years but with the worst of the Royal Commission hopefully behind the iconic bank, now could be the time to take a position in readiness for the next leg up.
Slowing credit growth is a concern, however, the bank is likely to be supported by bank friendly fiscal policy measures. CBA shares currently trade on a dividend yield of 5.4%.
Medibank Private Ltd (ASX: MPL)
The private health insurer has been a solid performer since it listed in 2014, rising 63% in just under 5 years. However, this only tells part of the story as the company has also consistently paid shareholders a healthy fully franked dividend.
The company posted a net profit after tax of $458 million last financial year and has a healthy balance sheet which supports its current fully franked 4% dividend.
Macquarie Group Ltd (ASX: MQG)
Macquarie is Australia’s largest investment bank with operations spread across the globe. The bank makes a large chunk of its profit by operating in the investment markets and managing ‘assets’ on behalf of individuals and organisations.
Macquarie recently announced it had undertaken a $1 billion institutional capital raising to fund investment opportunities. Despite the Macquarie share price sitting close to its all-time high, the current dividend yield still comes in at a very respectable 4.4%.
QBE Insurance Group Ltd (ASX: QBE)
As Australia’s largest global insurer, QBE operates in 31 countries around the world. Unfortunately, ever since the onset of the Global Financial Crisis, company has been a perennial disappointment for investors.
QBE has had many false starts since but has never gained any real traction with investors due to poor management including a slew of poor capital allocation decisions and some major catastrophic events that have set the company back.
Management have streamlined the business somewhat in recent years and it appears things are improving. Trading on a dividend yield of 4.3%, QBE could be a good candidate for a spot in your dividend portfolio.
Woodside Petroleum Limited (ASX: WPL)
Woodside is Australia’s largest independent oil and gas company, possessing an impressive global portfolio. Woodside posted a net profit after tax of US$419 million in 1H19 which was actually a long way short of what had been expected by analysts
.
The business is somewhat at the mercy of commodity prices, in particular the price of oil. As a result, profits can be a little more volatile and unpredictable when compared to the companies listed above.
Having said that, Woodside is consistently profitable and currently trades on a very juicy dividend yield of 5.8%.
For some more proven, dividend-paying ASX shares, check out the companies profiled in the free report below.
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At the time of publishing, Luke has no financial interest in any companies mentioned.
