3 ASX 200 dividend shares with 5% yield 

The S&P/ASX 200 Index (ASX: XJO) dividend environment has seen a significant shakeup with household dividend shares such as the big four banks, Transurban Group (ASX: TCL) and Sydney Airport Holdings Pty Ltd (ASX: SYD) unable to maintain market leading yields. In this new era of dividend investing, here are 3 ASX 200 dividend shares that pay a reliable 5% yield. 

1. WAM Capital Limited (ASX: WAM) 

WAM is a Listed Investment Company (LIC) that provides investors exposure to an actively managed diversified portfolio of undervalued growth companies on the ASX.

In FY20, its portfolio delivered an outperformance of 4.4% against the ASX 200 and declared a fully franked dividend of 7.75 cents per share. This brings its total dividends paid for the year to 15.5 cents or a dividend yield of 8.50% at today’s prices. 

WAM has an incredibly consistent history of dividend payments with more than a decade of steadily increasing dividends. Given the significant changes to its investment portfolio to adjust to today’s new environment and its flexible mandate to increase and decrease cash weightings where required, I believe WAM is the ASX 200 dividend share fit for all seasons. 

2. Rio Tinto Limited (ASX: RIO) 

The iron ore spot price has hit a 15-month high following record imports from China. In the first eight months of the year, China imported 759.91mt of iron ore, rising 11 per cent from the January-August period in 2019, according to customs data.

From a supply perspective, Brazil has struggled to maintain output while the rest of the world has been modestly impacted by temporary COVID-19 restrictions. With raging demand and challenging supply side conditions, Australian iron ore miners are positioned to reap the rewards.

I believe Rio Tinto will provide investors exposure to a diversified materials portfolio while ensuring that the upside to iron ore is captured. The recent strength in commodities has enabled Rio Tinto to pay a market-leading dividend yield of 5.90% at today’s prices. I expect iron ore miners to continue to act as leading ASX 200 dividend shares in the short-medium term.  

3. Tassal Group Limited (ASX: TGR) 

Tassal is engaged in the farming and distribution of Atlantic salmon and prawns. In the company’s FY20 results, the company delivered a 13.3% increase in operating EBITA and a 13.4% increase in operating earnings before interest, taxes, depreciation and amortisation (EBITDA).

The business has a strong growth record with year-on-year NPAT growth typically in the low-mid teens. Positive consumer trends in areas such as demand for sustainable brands, home eating and cooking, increasing health awareness and easy to prepare meal solutions further support Tassal’s salmon and prawn sales volumes.

Given its price-to-earnings ratio of just 10, I believe Tassal shares represent good value at today’s prices. Much like WAM, the company’s consistent and strong cash flows has seen more than a decade of steady dividends. It currently pays a dividend  yield of 5.20%.

More reading

• ASX 200 Weekly Wrap: Friday crash pulls ASX back below 6,000 points
• Why the Transurban share price is outperforming today
• WAM Capital share price edges higher on takeover bid
• 2 ASX dividend shares with yields over 10%
• ASX 200 Weekly Wrap: Earnings drag ASX back to reality

Motley Fool contributor Lina Lim has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Transurban 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.

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