I am sure you would agree with me that the idea of a free holiday is great, and, although few things in life are free, investing wisely in dividend-paying stocks could turn this idea into a reality.
I think investing today in the below 2 ASX 200 companies to fund your holidays could help you relax on your next adventure.
Macquarie Group Ltd (ASX: MQG)
Macquarie's strong profit history, dividend growth rate and yield make it an ideal candidate to help fund your next trip.
I would choose Macquarie over the Big Four banks due to its diverse business groups and high percentage of international income. Because of this, even though it pays a lower yield, I believe it to be more insulated from economic events.
Macquarie has experienced 50 years of unbroken profitability, which has allowed it to grow its total annual dividend significantly to $5.75 in FY19. This is 10% higher than that which it paid out in FY18. Pleasingly, this dividend growth looks set to continue as the first half dividend for 2020 is set to be paid today at a 16% increase over the prior corresponding period.
Including the first half dividend for 2020, Macquarie generates a trailing grossed up yield of 5.23%
Tassal Group Limited (ASX: TGR)
Although not usually viewed as a dividend share, and there are certainly higher yielding ASX companies, I believe Tassal provides a decent income that has the potential to grow over the coming years. After all, wouldn't you want your holiday to get better and better each year?
Tassel is a Tasmanian-based Salmon farming company that has recently added tiger prawns to its business. This strategy appears compelling and offers both geographic and species diversification. To fund this expansion Tassal recently completed a capital raising. However, once the infrastructure is fully established, prawns offer lower relative maintenance costs and are expected to exceed salmon in EBITDA $/kg. Both of these things should help increase the amount that filters through to the dividend.
With salmon sales up 10.3% over FY18 and the recent addition of the prawn business, Tassal appears set to continue its growth and thanks to a recent weakness in its share price currently offers a trailing grossed up yield of 4.77%
Foolish takeaway
Investing $10 000 into each company today would generate an annual pre-tax income of $1007. Now this may not send you to Rome or Paris but it would be enough to send you away locally or even to some of our close overseas neighbours – a decent trip considering you didn't have to work for it. Additionally, this is not a one-off holiday and as long as the businesses remain intact you could be holidaying from these proceeds each year. Maybe with rising yields affording more luxury each year!
