Today, Australia and New Zealand Banking Banking Group Ltd (ASX: ANZ) will only offer you a measly 0.20% p.a on a 12-month term deposit.
The current near-zero interest rate environment explains why investors are on the hunt for ASX companies paying dividends. In recent months, yields on many blue chip companies have fallen as market participants have bid up share prices.
This article will highlight 3 ASX shares with dividend yields above 3% – before factoring in any attached franking credits.
In most cases, to be eligible to receive a dividend, you must have purchased shares in the company prior to the ex-dividend date. This Rask video explains dividend dates.
1. Coles Group
Australia’s second-largest supermarket chain Coles Group Ltd (ASX: COL) currently offers a trailing dividend yield of 3.21%.
Panic shopping for essential items during the ongoing COVID-19 pandemic led Coles to achieve its 51st consecutive quarter of supermarket comparable sales growth. Talk about consistent.
Coles rewarded shareholders with a fully franked final dividend of 27.5 cents per share in August. This represented growth of about 14.6% on Coles’ 2019 final dividend.
2. JB Hi-Fi
Retailing powerhouse behind brands JB Hi-Fi and The Good Guys, JB Hi-Fi Limited (ASX: JBH) was a major beneficiary of the COVID-19 induced stay-at-home trade. The group’s motto “best brands at low prices” resonated with consumers as they stocked up on home appliances and entertainment products.
This trend saw JB Hi-Fi achieve impressive growth in FY20, with sales growing 12.5% to $5.32 billion and NPAT increasing 21% to $302.3 million. Management elected to pay a final dividend of 90 cents per share, up around 76% on the prior year. At the time of writing, JB Hi-Fi trades on a trailing dividend yield of 4.13%.
3. Woodside Petroleum
Australia’s largest natural gas producer, Woodside Petroleum Limited (ASX: WPL) has had a rough 2020 with oil prices falling as much 80% during the year. Despite facing a challenging environment, Woodside achieved a first-half underlying net profit after tax of US$303 million. This was down nearly 27.7% on the prior comparable period.
Consequently, the interim dividend was down around 28% from the prior year to 26 US cents per share. Annualising this dividend translates to a yield of 3.27%.
Summary
Of the three companies mentioned, I would prefer to buy shares in Coles for dividends. Coles has an enviable track record of growth, which has continued into the first quarter of FY21.
JB Hi-Fi shot the lights out in FY20, but may have a lull in growth in FY21 as many Australians have already stocked up on their entertainment and work-from-home products.
Woodside Petroleum’s profits, and therefore dividends, will be volatile due to the company’s sensitivity to the oil price.
