The big banks aren’t the only decent dividend options. Here are three ASX shares you may not have considered: Tassal Group Limited (ASX: TGR), Coca-Cola Amatil Ltd (ASX: CCL) and Metcash Limited (ASX: MTS).
Why Income Shares?
Income shares, or dividend shares, can be useful for generating a source of regular income. Generally, when I look for dividend shares I look for well-established companies with strong fundamentals in a defensive sector.
One defensive sector is consumer staples.
The first action many people take when a recession hits is to cut their spending. This affects all businesses, but some expenses are harder to cut than others. While consumer discretionary spending is relatively simple to cut, consumer staples are, well, staples.
They are the sort of products that you need, recession or no recession, and it can be difficult to reduce spending in this category by any material amount. That’s why businesses in the consumer staples industry are often sought after for stability, particularly for dividends.
Here are three ASX consumer staples shares you may not have considered…
1. Tassal Group Limited
Tassal is a Tasmanian-based salmon farming company founded in 1986 and listed on the ASX in 2003. Its operations include hatching, farming, processing, sales and marketing of Atlantic salmon. It operates under four different brands of Tassal, Superior Gold, Tasmanian Smokehouse and De Cost Seafoods.
The Tassal share price has been under fire this year, down nearly 7% year-to-date. However, Tassal announced this morning that it has received a major approval for an expansion of one its facilities, sending the share price higher.
Tassal shares currently only trade on a historical price-earnings (P/E) ratio of 12.6 times and they offer a trailing dividend yield of 4.33%, 25% franked. The video below explains franking credits.
2. Coca-Cola Amatil Ltd
Coca-Cola Amatil is the Australian distributor and rights holder to the famous Coca-Cola brand, which is owned by the US parent Coca-Cola Co (NYSE: KO). Coca-Cola Amatil started life in 1904 as the British Tobacco Company. The ‘Amatil’ in its name came in 1977 when it was renamed as Allied Manufacturing and Trade Industries Limited (AMATIL).
Another company in the consumer staples sector, Coca-Cola Amatil shares are up around 27.5% year-to-date with modest growth in its half-year report. While Coca-Cola Amatil dividends are unfranked, they have been consistently increased for the last few years from $0.42 in 2015 to $0.51 in 2019. The current trailing dividend yield is 4.42%.
3. Metcash Limited
Metcash is a leading wholesale distributor of supermarket products and the owner of popular retail brands like IGA, Mitre 10 and Foodland. In liquor, it owns The Bottle-O, Cellarbrations and Duncan’s.
Metcash has had a relatively volatile year but the share price is up more than 21% year-to-date. Unlike the other two companies on this list, Metcash pays fully franked dividends. Dividends were cut in 2017, but they then almost tripled in 2018 and were increased again in 2019.
Right now, Metcash shares offer a trailing dividend yield of 4.67% or a grossed-up (i.e. with franking credits) dividend yield of 6.67%.
Buy, Hold Or Sell?
These companies may not be the top picks for large or reliable dividends, but each has its own merits and advantages over one of the big banks or another real estate investment trust (REIT). While I wouldn’t hold any as a large position in my portfolio, they could be worth considering for a small exposure.
For three more dividend-paying shares, check out the free report below.
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Disclosure: At the time of publishing, Max does not have a financial interest in any of the companies mentioned.
