One of the biggest dividend yields on offer on the Australian share market comes from Magellan Financial Group Ltd (ASX: MFG) shares.
Over the last 12 months, the fund manager has declared and paid two dividends. Its interim dividend of 46.9 cents per share and its final dividend of 69.8 cents per share. The latter includes a 30 cents per share special dividend.
This totals 116.7 cents per share that Magellan has paid to its shareholders over the last 12 months. Which, based on the current Magellan share price of $9.32, means a trailing yield of 12.5%.
As a comparison, the market average dividend yield usually sits at around 4%. So, Magellan's trailing yield is more than triple this.
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Is the dividend yield on offer with Magellan's shares for real?
Firstly, it is important to note the word trailing.
Trailing yields refer to the dividends that have been paid over a rolling 12-month period.
And, as readers will be aware, unlike death and taxes, dividend payments are not certain. Particularly for companies that have been struggling like Magellan has over the last 12 months.
As a result, just because Magellan shares have paid 116.7 cents per share in dividends since this time last year, there's no guarantee that the same will happen moving forward.
Dividend forecasts
The good news is that the team at Goldman Sachs believes there's going to be one more year of supersized dividends before a major cut occurs.
Its analysts are forecasting dividends per share of 102 cents in FY 2024. This would mean a very generous 10.9% dividend yield for investors.
A year later in FY 2025, Goldman expects a cut to 50 cents per share, followed by another cut to 43 cents per share in FY 2026. This will mean attractive but more modest yields of 5.35% and 4.6%, respectively.
Goldman currently has a neutral rating and a $10 price target on the fund manager's shares.
