Investors have witnessed many S&P/ASX 200 Index (ASX: XJO) and All Ordinaries (ASX: XAO) shares withdraw guidances and defer dividend payments across March and April.
With uncertain times ahead, here are 3 top ASX dividend shares to watch.
1. Money3 Corporation Limited (ASX: MNY)
Money3 may not be a household ASX dividend share, but it represents a solid small-cap business with strong cash flow. It has also faced minimal disruption as a result of COVID-19.
The company provides automotive finance for the purchase and maintenance of vehicles. It estimates that approximately 1 in every 500 vehicles in Australia and 1 in every 800 vehicles in New Zealand have a current Money3 loan. Despite potential COVID-19 concerns, the business has reported a "minimal" impact on cash collections. It is expecting demand to return for automotive finance as lockdown restrictions ease.
The company reported solid YTD March 2020 financial results, with earnings before interest, tax, depreciation and amortisation (EBITDA) growing 43.6%. Net profit after tax (NPAT) also soared 49.2% on the prior corresponding period. As at 27 April, the company had a cash balance of $43 million and currently pays a dividend yield of 6.25%.
2. Fortescue Metals Group Limited (ASX: FMG)
Despite the ASX 200 falling more than 3% on Thursday, the Fortescue share price held up held firm, falling a mere 0.73%. This follows news that the world's largest iron ore miner, Vale SA was ordered to halt mining at its Itabira complex after 188 workers tested positive to coronavirus.
At the same time, demand in China is firm with low port stockpiles. Australian majors BHP Group Ltd (ASX: BHP), Rio Tinto Limited (ASX: RIO) and Fortescue will be poised to benefit. In my opinion, Fortescue could be the better pick, given its pure exposure to iron ore. It currently pays a dividend yield of 7.02%.
3. Tassal Group Limited (ASX: TGR)
There are many consumer tailwinds for Tassal's salmon and prawns business. In Tassal's recent presentation to the Goldman Sachs Emerging Leaders conference, it highlighted the following trends:
- Rise in consumer demand for sustainable products that have traceability
- Rise in at-home meals over eating out
- Greater demand for easy to prepare meals solutions
- Online media consumption to play a larger role in purchasing decisions.
From a supply perspective, Tassal highlighted that its strategic focus is to continually optimise biomass growth, size and sales mix to drive salmon EBITDA $/kg. I believe Tassal's experience in sustainable farming practices in breeding, biosecurity, feed diet formulation, growth times and survival all attribute to bigger salmon that will generate better margins.
In my opinion, Tassal should be a very consistent ASX dividend share into the future, and currently pays a dividend yield of 4.68%.
