3 ASX dividend shares with large and growing dividends

There are some ASX dividend shares that have growing dividends with a large dividend yield.

The RBA recently decided to reduce the official interest rate to just 0.10% recently.

Here are three businesses with large dividend yields and growing payouts:

Pacific Current Group Ltd (ASX: PAC)

Pacific describes itself as a global multi-boutique asset management business committed to partnering with exceptional investment managers. It combines its capital with strategic business development to help businesses grow.

The ASX dividend share increased its dividend by 40% to $0.35 per share, supported by the underlying earnings per share (EPS) increasing by 18% to $0.44.

Its profit growth was driven by an increase of the funds under management (FUM) to $93.3 million. When excluding boutiques sold or acquired during the year, FUM rose 52%. GQG grew FUM from US$25.1 billion to US$44.6 billion.

The FUM growth continued into the first quarter of FY21. FUM went up 14% to $106.4 million. However, in native currencies, US dollar orientated fund managers saw FUM rose by 19.3% – FUM growth in Australian dollar dollars was reduced by the appreciation of the Australian dollar.

It currently offers a grossed-up dividend yield of 8.3%.

Magellan Financial Group Ltd (ASX: MFG)

Magellan is also in the funds management sector. It runs different portfolios, with some focused on international equities, some focused on infrastructure equities and there is also Australian equity strategies.

FY20 saw Magellan’s average FUM grow by 26% to $95.5 million which helped adjusted EPS rise by 17%. Actual EPS was 218.3 cents, whilst total dividends went up 16% to 214.9 cents per share.

It recently invested in a new investment bank called Barrenjoey which Magellan hopes will make a material contribution to profit in the coming years. Barrenjoey will provide corporate and strategic advisory, equity and debt capital market underwriting, cash equities, research, prime brokerage as well as traditional fixed income services to Australian and international clients.

Whilst the average FUM in FY20 was $95.5 million, Magellan’s latest monthly FUM update showed $103.48 billion – an increase of 8% since the end of FY20.

The ASX dividend share is also going to launch a new series of funds with lower costs and more diversified portfolios of high quality companies. The management fee will be 0.5% per annum. It’s launching a sustainable fund as part of this launch.

It’s also getting closer to the launch of a retirement product.

Magellan currently has a grossed-up dividend yield of 5%.

Nick Scali Limited (ASX: NCK)

Nick Scali is one of the biggest furniture businesses in Australia. It imports over 5,000 of containers of living room and dining room furniture, as well as occasional furniture.

In FY20 the company’s net profit after tax and EPS were flat, in a year affected by COVID-19. The earnings before interest and tax (EBIT) margin improved by 90 basis points to 23.2%. The operating cashflow (before interest and tax) increased by 22.6% to $75.4 million.

The Nick Scali board decided to increase the FY20 final dividend per share to 22.5 cents per share. That brought the grossed-up dividend to 8.1%.

Nick Scali recently gave a trading update for the first quarter of FY21 showing that written sale orders continue to be “materially up” on last year despite the closure of stores since August in Melbourne. Total sales orders for the first quarter were up 45% on the previous year and this trend has continued through October. Online orders were also up 47% compared to the last quarter of FY20.

The ASX dividend share previously guided that profit growth would be 50% to 60% higher than last year. It’s now expecting first half profit will be up 70% to 80%.

More reading

• Leading broker warns that US dollar could face bear market crash in 2021
• Here are the shares Magellan has been buying recently
• 2 ASX dividend shares with yields over 5% today
• The 5 best-performing ASX 200 shares so far this year
• ASX 200 hits 8-month high. Here’s why we could go higher from here

Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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