2 ASX dividend shares with yields above 5%


Some ASX dividend shares offer income yields of more than 5%. Banks are certainly not offering that level of income from savings accounts at the moment.

But a business isn’t worth buying just because it pays a dividend, even if the yield is large.

The share price also has to make sense for it to be an attractive valuation.

Here are two ASX dividend shares with attractive yields and good valuations according to brokers:

Nick Scali is rated as a buy by the broker Citi, with a price target of $17.60. At the current Nick Scali share price, Citi thinks that it will pay a grossed-up dividend yield of 9.5% in FY22.

The FY22 half-year result from the furniture business was stronger than the broker was expecting and it still has more good sales lined up with its order book.

In the first six months of FY22, Nick Scali grew its revenue by 5.4% to $180.3 million, though net profit fell by 6.6%. It paid an interim dividend of $0.35 per share.

The ASX dividend share explained that more than half of its store network was closed during the first quarter. There were also production delays, particularly in Vietnam, which was in lockdown for a period of three months.

Nick Scali’s gross profit margin increased 30 basis points to 64.3%, though the acquired business Plush had a gross profit margin of 54.8%.

January 2022’s outstanding order bank was 70% higher than last year.

Over the long-term, the company is aiming to reach at least 85 Nick Scali stores and 90 to 100 Plush stores.

The online division of Nick Scali is making a high level of profit – half-year revenue was $13.7 million, with earnings before interest and tax (EBIT) of $8 million.

GQG is a fund manager with around US$90 billion of funds under management (FUM).

Since the start of the year, the GQG share price has fallen by more than 25%.

But its FUM on 31 December 2021 was US$91.2 billion. The FUM only fell 1.5% to US$89.8 billion by 28 February 2022, so GQG shares have fallen much further in percentage terms.

The company noted in the monthly FUM update for February 2022 that there has been extraordinary volatility, but it has continued to see positive net flows. It added $1.6 billion of net flows in February, taking the company to $2.5 billion in net new flows in the year to date.

All of the fund manager’s investment strategies show outperformance over three and five years.

It also noted that the ASX dividend share has very limited direct exposure to Russia in its investment strategies.

GQG has committed to paying a high level of profit out as a dividend for investors. In the recently-reported result for the period ending 31 December 2021, it paid out 90% of its profit generated since the initial public offering (IPO).

The business is currently rated as a buy by the broker Morgans with a price target of $2.27. based on the broker’s FY22 expectations, GQG has a forecast dividend yield of 7.1%.

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