Getting a yield of more than 9% on an investment seems way too good to be true these days, with interest rates at record lows and all.
Forget cash savings and term deposits for one – you would struggle to get 2% in interest these days, let alone 9%.
Government bonds are not much better – the current 10-year Government bond yield is just over 1% at the time of writing. That doesn't even cover inflation, let alone provide you with a real return.
With property prices on the move upwards again, that leaves only ASX dividend shares as a real option for achieving a 9% yield.
Luckily, I've found 2 ASX shares that offer just that today.
National Australia Bank Ltd (ASX: NAB)
The NAB share price has spent the last few months in virtual freefall – collapsing from nearly $30 a share in September to today's price of $24.81 (a 17% drop in 4 months). The good news? NAB shares now offer a starting yield of 6.7%, which grosses-up to 9.57% if you include the value of NAB's full franking credits. That's assuming that NAB's freshly-trimmed dividend payout of $1.86 per annum continues as well.
Although there are still issues facing the ASX banking sector as a whole (and I wouldn't rule out the possibility of further dividend cuts in 2020), I still think this kind of yield is almost too good to pass over, especially if you're an income-focused investor.
WAM Capital Ltd (ASX: WAM)
WAM Capital is a listed investment company (LIC) that focuses on small- to mid-cap ASX shares. It has managed an impressive performance history since its inception in 1999, returning around 16.8% per annum on average (before fees) since then.
A large part of these returns has been fully franked dividend payments. WAM Capital has been raising its dividend consistently since the GFC over a decade ago. Today, WAM shares are offering a 6.77% trailing yield, which comes in at 9.67% grossed-up. Although WAM shares usually trade at a premium to the value of their underlying securities these days, this is arguably justified for such an impressive yield.
Foolish takeaway
These 2 ASX dividend shares demonstrate how shares can offer some of the best yields on cash you can get today. Although there are always risks with ASX shares, I think income investors have 2 compelling income options with these dividend payers today.
