The Insurance Australia Group Ltd (ASX: IAG) share price has enjoyed a strong run recently. The Warren Buffett investment, quota-share arrangement, and IAG's InsurTech venture make for a sexy story, but it's hard to deny that the company's dividend yield (as a % of the share price) is no longer the best on offer.
Here are 3 companies that pay a bigger dividend than Insurance Australia Group right now:
Sky Network Television Ltd (ASX: SKT)
Sky Network is a company facing challenges in the way that content is distributed to and consumed by users, with the likes of Netflix and similar competing with pay-TV for viewers. Counteracting this is Sky's ownership of sports media rights for the next few years, which prevents competition with one of Sky's major customer drawcards.
Sky is a business in transition, with its latest offers involving no lock-in contracts and likely to result in higher churn and potentially lower revenue per user over the medium term. With an 8% trailing dividend, it could be an interesting contrarian idea for investors willing to investigate its competitive position further.
G8 Education Ltd (ASX: GEM)
Childcare centre operator G8 Education pays an attractive 6.6% quarterly dividend, fully franked. The company has a track record of growing profits and dividends over the medium term, although recent announcements suggest that competition is increasing. Management also continues to raise capital to fund further expansions, but I think as the company gets bigger it will become harder to find attractive centres to buy, and growth will slow.
Despite the recent capital raising at above-market prices, I would prefer to get G8 shares cheaper in order to build in something of a margin of safety.
Telstra Corporation Ltd (ASX: TLS)
Telstra Corporation shares have been sold off savagely in recent times, and now pays an estimated 7.8% fully franked dividend. While competition in the mobile space appears to be heating up, Telstra is one of the most recognised brands in Australia and investors are being offered attractive returns simply from holding the company for its dividend.
Profits and the dividend could come under some pressure, but it is also important to remember that Telstra has important advantages – like its partnership with retail specialist Vita Group Limited (ASX: VTG), which operates Telstra's retail stores – that will serve it well over the next decade.
