2 small cap stocks with massive fully franked dividend yields


ASX dividend shares rarely trade on double digit dividend yields, and when they do, it’s usually a sign of a forthcoming dividend cut.

But these 2 ASX small cap stocks might just buck the trend.

One is growing strongly, and increased its most recent dividend by 36 per cent. Its Managing Director recently said he was “staggered” at the company’s high dividend yield.

The other upgraded earnings in January, and one top fund manager thinks the share price weakness is unwarranted.

Here are 2 small cap dividend shares that are currently trading on grossed up (fully franked) dividend yields of over 10 per cent.

Bell Financial Group Limited (ASX:BFG)

Bell Financial is a top 10 holding in the highly respected and highly concentrated The Supervised Fund.

Bell provides stockbroking, investments and financial advisory services to private, institutional and corporate clients. Its three units are Bell Potter Securities, the online broker Bell Direct and Bell Potter Capital.

In 2017, Bell grew revenue by 12 per cent, profits by 26 per cent and increased its fully franked dividend by 36 per cent to 7.5 cents per share.

At its recent AGM presentation, Managing Director Alastair Provan noted that based on the 31 December closing Bell Financial Group share price, this represents a fully franked dividend yield of 10 per cent and a grossed up yield of 14.3 per cent — “which I find staggering.”

Although the Bell Financial share price has since risen to trade at 78 cents, today BFG shares currently trade on a fully franked dividend yield of 9.6 per cent, or 13.7 per cent grossed up.

Bell Financial reported 2018 is off to a good start, noting as at the end of April, revenue was up 13 per cent on the previous year, with profits even further ahead. The company did caution the second half of 2017 was a strong year for the company, “so we will have to
keep pedalling hard to match.”

Vita Group Limited (ASX:VTG)

Spheria Australian Microcap Fund recently named Vita Group amongst one of three companies to be “strong positive contributors in the long term given industry dynamics, free cash flow generation and valuation appeal.”

Vita Group is best known as the operator of Telstra (ASX:TLS) branded stores, although it has recently diversified into technology accessories, men’s leisurewear and cosmetic clinics.

The Telstra business has its obviously challenges, given Telstra’s recent woes, but it’s the latter that Spheria focuses on as having strong medium to long term prospects for the company.

Vita upgraded its earnings forecast in January. If the company delivers profits in the range it currently expects, the full year full franked dividend should be around 10 cents per share.

The Vita Group share price currently trades at $1.05, meaning Vita shares trade on a forecast fully franked dividend yield of around 9.5 per cent, or 13.6 per cent grossed up for franking credits. 

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See the 3 stocks

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au