High yield ASX dividend shares could be the answer to boost your income.

But you need to be careful. If you go for shares that have unsustainably high dividend yields you could see a dividend cut in the future.

I think the below shares offer the right combination of high yield and potentially a bit of growth:

Rural Funds Group (ASX: RFF)

Rural Funds is one of my favourite high yield ASX dividend shares.

The farmland real estate investment trust (REIT) currently has a FY21 distribution yield of 5.6%. It aims to increase its distribution by 4% each year. I think that’s a solid growth rate with how little inflation there is these days.

Contracted rental indexation is a big factor in growing the rental profit and distribution. It is also investing in productivity improvements at its farms for its tenants, unlocking more rental income.

The long-term weighted average lease expiry (WALE) of more than 10 years gives good income visibility for the ASX dividend share.

Arena REIT No 1 (ASX: ARF)

Arena is another REIT that I’m a fan of. It invests in social infrastructure properties like early learning centres and healthcare buildings.

Some of its largest tenants, by rental income, are big childcare providers like Goodstart and G8 Education Ltd (ASX: GEM).

Arena REIT has been steadily been growing its distributions for several years. The ASX dividend share recently guided that the FY20 distribution would be 13.9 cents to 14 cents per unit. This equates to a FY20 distribution yield of at least 5.8%.

Medibank Private Limited (ASX: MPL)

Medibank isn’t normally a high yield ASX dividend share I’d go for. But I have to give credit to Medibank as a potential income option.

The private health insurer currently has a grossed-up dividend yield of 7.5%. That’s an attractively high yield for an ASX dividend share.

The company recently updated the market to say that it doesn’t really see much of a change to its FY20 guidance despite COVID-19. This should translate into solid earnings for FY20, which should mean Medibank has the ability to maintain its dividend.

There has been a recent agreement for public hospitals to stop charging patients as private patients if they have health insurance. This should be helpful for Medibank’s earnings.

I’m not sure about the long-term direction of Medibank’s policyholder numbers, but there doesn’t need to be much growth for Medibank to continue being a good ASX dividend share during this period. Its good balance sheet also helps the company remain robust.

Foolish takeaway

All three of these ASX dividend shares have attractively high yields. The RBA interest rate is now very low. Of the three options I’m probably most attracted to Rural Funds because it is least affected by what’s going on with COVID-19.

More reading

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Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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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As a sector, healthcare has provided some of the strongest returns over the past year. The S&P/ASX 200 Health Care Index (ASX: XHJ) has returned more than 26% over the last 12 months, comfortably outperforming the benchmark indexes for other sectors.

But one ASX healthcare share that has blown this return out of the water is Opthea Ltd (ASX: OPT). Impressively, the Opthea share price has skyrocketed more than 350% compared to this time last year.

Opthea is a developer of novel biologic therapies for the treatment of eye diseases. The company specialises in the treatment of wet age-related macular degeneration (AMD) and diabetic macular edema (DME). Wet AMD is the leading cause of visual impairment in the elderly, while DME is the leading cause of visual impairment in diabetic populations.

What’s put a rocket under the Opthea share price?

Investors have been buying up Opthea shares in a hurry ever since the company delivered strong clinical trial results in August last year.

These results related to the company’s flagship OPT-302 combination therapy for treatment-naïve patients with wet AMD. 

According to the release, the OPT-302 (2.0 mg) combination therapy showed statistical superiority for mean visual acuity – the most accepted and sensitive primary efficacy outcome.

These results are significant given that wet AMD is the leading cause of vision loss in people over the age of 50 across the Western world. And from an investor’s perspective, the current standard of care treatments for wet AMD and DME generated more than US$10 billion of revenue in 2018 – so the addressable market opportunity is significant.

What else has Opthea announced?

Another major announcement came this morning when Opthea reported a further set of trial results. However, this time the results related to the OPT-302 combination therapy for the treatment of DME. 

The phase 2a trial found that when OPT-302 was used in conjunction with existing medication, 52.8% of the refractory DME patients gained ≥ 5 letters of visual acuity after 12 weeks.

“These positive topline Phase 2a results in a second disease indication of DME, build on our extensive prior clinical studies in wet AMD which demonstrated superiority in visual improvement with OPT-302 combination therapy compared to anti-VEGF-A monotherapy standard of care,” said CEO and managing director Dr Megan Baldwin.

While the company viewed the outcome of the phase 2a trial positively, it appears investors were expecting a stronger result. At the time of writing, the Opthea share price is down 9.52%, while the S&P/ASX 200 Index (ASX: XJO) is edging 0.20% higher.

The phase 2a trial is ongoing, with the final participants due to complete the week 24 follow-up visit later this month. The company expects the final outcomes for longer-term safety and treatment durability to be available in the second half of this year.

Meanwhile, Opthea noted that it is continuing to plan for its phase 3 program in wet AMD and progress its manufacturing of OPT-302 for phase 3 clinical trials.

More reading

• EML Payments and these ASX mid cap shares could be destined for big things
• 3 ASX biotech shares that have soared higher today
• 3 quality mid cap ASX shares to buy with $3,000

Motley Fool contributor Cathryn Goh 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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It can be challenging times for investors looking to get into the market or add to existing positions. Looking at the recent performance of many S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) shares, investors might feel they have missed the boat for buying opportunity. However, here are 2 resilient and incredibly cheap ASX 200 shares which, I believe, are still trading with great opportunity.

1. Tassal Group Limited (ASX: TGR)

Tassal Group is an Australian company engaged in the supply of Atlantic salmon and prawns both in Australia and internationally. It is involved in the full product life cycle from hatching, farming and processing to sales and marketing. 

On 29 April, Taassal commented on the impact of COVID-19 on its business. It noted that while the long-term impacts on the global economy and consumer behaviour are still unknown, the overall market dynamic for salmon remains positive.

Retailer agreements underpin the current domestic pricing while also creating favourable volume levels. Tassal’s domestic wholesale business, however, may face headwinds. This comes as food service businesses such as pubs, clubs, restaurants and cafes may continue experiencing disruptions caused by restrictions. Despite this, the ASX 200 company remains focused on increasing production efficiencies. It will achieve this through the strategic use of exporting whilst maintaining adequate domestic supply. 

From a production perspective, Tassal reports that its salmon biomass growth is exceeding expectations. Furthermore, the company’s optimised pricing should provide increased overall operating and earnings before interest, taxes, depreciation, and amortization (EBITDA) price-per-kilogram returns. This, combined with a focus on more profitable product lines in the domestic and export markets, should translate into increased FY2021 returns for salmon.  

I believe there are many reasons Tassal could be a steady and cheap ASX 200 share for many years to come. It trades at a relatively good price-to-earnings ratio (P/E) of 11.64. This is despite delivering a CAGR of 16.7% for revenue and 12.8% for NPAT over the past 5 years. The company’s history of reliable growth and favourable customer behaviour makes Tassal a good buy at today’s prices. 

2. Credit Corp Group Limited (ASX: CCP) 

Credit Corp specialises in debt purchase and debt collection services. It purchases past-due consumer and small business debts from major banks, utility producers and finance and telecommunication companies. The company operates in Australia, New Zealand and the United States. It works with customers to agree on affordable repayments which improve their credit standing over time while ensuring they can remain active in the community. 

On 29 April, the company provided a market update and proposed equity raising. It had solid metrics leading into the pandemic with Australia and New Zealand debt buying up 9% for the 9 months to March 2020. Its record face value of accounts are under the arrangement of $1.4 billion. Its US debt buying saw collections up 57% and record face value of accounts under arrangement of $0.3 billion. 

However, its collections for April are below pre-COVID-19 expectations. Australia combined with New Zealand and the US have fallen by 15% and 16% respectively. It notes that the medium-term impact on credit-impaired customers may be more severe once temporary government support and community forbearance is withdrawn. 

Its equity raising is focused on strengthening the balance sheet. Under all downside scenarios, Credit Corp’s balance sheet can withstand even the most extreme economic shocks. I believe the company’s improved capital position and history of consistent growth make it a buy at today’s discounted prices. 

Foolish takeaway 

Buying shares that have v-shaped charts is challenging and risky. I believe Tassal Group and Credit Corp are two less volatile businesses and relatively cheap ASX 200 shares which can deliver shareholder value in the medium-long term. 

More reading

• These ASX bank stocks just got upgraded by top brokers to “buy” – and they aren’t the big four
• Does the ASX 200 just follow the US markets?
• ASX 200 up 0.45%: Harvey Norman declares special dividend, gold miners race higher
• Why you can’t afford not to invest in ASX 200 shares in 2020
• These ASX shares could defy the market sell-off this morning

Motley Fool contributor Lina Lim 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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