5.2% dividend yield? I'm buying this stellar ASX stock in bulk

I've been buying this stock for its monthly dividends…

| More on:
Different Australian dollar notes in the palm of two hands, symbolising dividends.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

sdf

One of the ASX shares I've been buying most enthusiastically over the past year or two offers investors a rather bulky dividend yield today. As you may have gleaned from the headline, that dividend yield currently sits at a robust 5.24%.

That hefty yield also tends to come with full franking credits attached, meaning that, in grossed-up terms, a yield as high as 7.49% is potentially on the table when accounting for the value of those franking credits.

The ASX share in question is none other than Plato Income Maximiser Ltd (ASX: PL8). Plato Income Maximiser is a listed investment company (LIC) that specialises in providing consistently high (and fully franked) income to its shareholders. It does so with the regular payment of monthly dividends, which is a rather rare thing on the ASX.

Like most LICs, Plato Income Maximiser owns an underlying portfolio of assets (in this case, ASX shares), which it manages on behalf of its shareholders.

As one would expect, these shares are all ASX dividend heavyweights, including the likes of ANZ Group Holdings Ltd (ASX: ANZ), Fortescue Ltd (ASX: FMG), Commonwealth Bank of Australia (ASX: CBA), Telstra Group Ltd (ASX: TLS), and Medibank Private Ltd (ASX: MPL).

Over the past 12 months, Plato shares have paid out 12 monthly dividends, each worth 0.55 cents per share. That has resulted in an annual dividend total per share of 6.6 cents. With the Plato share price of $1.26 at the time of writing, this gives the company a trailing dividend yield of 5.24%.

Why do I keep buying this ASX stock for its dividend yield?

It goes without saying that bagging an investment with a 5.24% dividend yield is appealing in itself.

However, there are other reasons I find this particular investment attractive. Firstly, I have confidence that Plato's management team will be able to maintain dividend payments at a relatively consistent level going forward, thanks to the company's robust stock-picking criteria.

As such, I don't worry about a dividend cut from Plato in the same way I worry about the income reliability of some of my other ASX dividend shares.

Secondly, the monthly dividend cash flow from this company is also appealing. Having a large dividend cheque arrive like clockwork every month is a fantastic benefit this company brings to my portfolio. Every month, I have the wonderful choice of whether to save that influx of cash, or to redeploy it into other dividend-paying ASX shares.

So I'm happy to keep buying Plato Income Maximiser. And if this company experiences a meaningful share price dip, I will regard it as a lucrative buying opportunity to secure an even higher dividend yield.

Motley Fool contributor Sebastian Bowen has positions in Plato Income Maximiser and Telstra Group. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has positions in and has recommended Telstra Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A couple makes silly chip moustache faces and take a selfie on their phone.
Dividend Investing

Maximising franked dividend income: Here's why I own these 2 ASX shares

I make exceptions for these two income shares.

Read more »

A group of young people smiling and watching TikTok on their mobile phones
Dividend Investing

Buy Telstra, Woolworths, and this ASX dividend stock

Analysts think these stocks could be top picks for income investors.

Read more »

A little girl holds broccoli over her eyes with a big happy smile.
Dividend Investing

1 practically perfect Australian stock down 25% to buy for long-term income

There aren't many quality stocks that are down 25% from their highs.

Read more »

Hand of a woman carrying a bag of money, representing the concept of saving money or earning dividends.
Dividend Investing

2 compelling ASX dividend shares with yields above 6%

These stocks have generous dividend yields.

Read more »

A man sits thoughtfully on the couch with a laptop on his lap.
Dividend Investing

Aiming for rock-solid retirement income? I'd buy these two ASX shares

These stocks are excellent options for consistent payments.

Read more »

Cheerful boyfriend showing mobile phone to girlfriend in dining room. They are spending leisure time together at home and planning their financial future.
Dividend Investing

These ASX dividend stocks could supercharge your passive income

Let's see which stocks are being tipped as buys by analysts this month.

Read more »

A woman with a magnifying glass adjusts her glasses as she holds the glass to her computer screen and peers closely at it.
Dividend Investing

This is the ASX share in my portfolio with the biggest dividend yield

This stock offers a big dividend yield.

Read more »

Broker written in white with a man drawing a yellow underline.
Dividend Investing

Brokers say these ASX 200 dividend shares are top buys

Here are three shares that brokers think income investors should be buying.

Read more »