Top 10 dividend stocks on the ASX

The dividend yield is a major component for many investors when making investment decisions. Which stocks are estimated to deliver the best dividend yield on the ASX in 2019?

ASX Source: Bloomberg

What is a dividend?

A dividend is the payment of a share of a company’s earnings to their shareholders. Determined by a corporation’s board, and normally ratified by shareholders, the dividend a firm pays often plays a big part in the decision making of investors.

This is especially true of investors who are seeking income out of their capital, over and above the capital appreciation of their initial investment. The measure an investor looks at when judging the appeal of a company’s dividend is the dividend yield. Put simply, it’s the dividend yield divided by a company’s share price; or, broken down further, the ratio of a business’ earnings distributed to investors, compared to the cost of buying a single share of that company.

Best 10 dividend stocks to watch

Below are the top 10 large-cap dividend stocks on the ASX:

  1. National Australia Bank (NAB)
  2. Stockland
  3. Wesfarmers
  4. Westpac
  5. Vicinity Centres
  6. AGL Energy
  7. Aurizon Holdings
  8. Scentre Group
  9. Suncorp
  10. Commonwealth Bank of Australia (CBA)
Company Stock Ticker 12M Projected Yield Dividend Yield (%) 5Y Dividend Growth (%) 5Y Return (%)
National Australia Bank (NAB) 8.0% 8.1% 1.1% -18.60%
Stockland (SGP) 7.3% 7.0% 2.4% 1.56%
Wesfarmers (WES) 6.0% 6.4% 7.5% 13.81%
Westpac (WBC) 7.3% 7.3% -0.5% -25.33%
Vicinity Centres (VCX) 6.8% 6.4% 1.5% 5.88%
AGL Energy (AGL) 6.0% 5.4% 12.9% 48.23%
Aurizon Holdings (AZJ) 6.5% 5.4% 7.2% -9.02%
Scentre Group (SCG) 6.2% 5.7% N/A 28.25%
Suncorp (SUN) 6.1% 5.0% -0.7% 5.07%
Commonwealth Bank of Australia (CBA) 6.1% 6.1% 2.5% -7.23%

National Australia Bank (NAB)

Australia’s fourth largest 'Big-4' bank by market capitalisation, the NAB has the reputation of being the nation’s business bank, though its operations extends to all traditional areas of commercial banking. Like many of the 'Big-4', one of the largest appeals of investing in the company is its attractive dividend. According to analysts, the 12-month projected dividend yield of NAB stock will be almost 8%.

Stockland (SGP)

SGP is an Australian property group. It develops and manages a diverse range of real estate assets, including retail centres, residential communities, retirement homes, and office and industrial properties. Because of its status as a real estate sector giant, SGP burnishes strong defensive sector appeal, meaning it is a very yield sensitive stock. Analysts currently forecast a 7.8% yield from the company in 2019.

Wesfarmers (WES)

While best known for its presence in the consumer discretionary space, WES boasts a diverse range of services. Its biggest footprint is in the retail sector; however, the company does operate business-arms with interests in industries such as mining, insurance, manufacturing, and energy. One of the largest companies on the ASX, analysts’ projected 12-month yield is currently 7.3%.

Westpac (WBC)

Another of Australia’s 'Big-4 Banks' – in fact, it’s the nation’s second-largest – WBC provides a full scope of commercial banking services to individuals, businesses, and institutions. Having found itself mired in the commercially crippling Royal Banking Commission, the bank is still forecast to deliver a flat, but still attractive dividend yield in 2019 of 7.0%, according to the consensus of equity analysts.

Vicinity Centres (VCX)

Involved in the ownership of retail assets, and the operation of property management services, VCX is another popular real estate investment trust (REIT) listed on the Australian Stock Exchange. Finding a level of appeal as a defensive sector, yield-stock, analyst consensus estimates that the company ought to deliver a dividend yield of 6.8% this – up from 6.5% in the year prior.

AGL Energy (AGL)

One of Australian biggest utilities companies, AGL sells and distributes gas and electricity, on a retail and wholesale basis, to customers across the country. Being a utility sector stock, AGL’s dividend yield is considered an important feature of owning the company’s stock. In the year ahead, it is estimated that AGL's dividend yield will rise from 5.5% to 6.7%.

Aurizon Holdings (AZJ)

AZJ is an industrial sector stock, with operations focusing on rail freight. The company provides freight haulage services on the central Queensland coal network and provides ancillary services in track maintenance and other support functions. A stock exposed to the economic cycle, AZJ isn’t known entirely for its dividend yield appeal, but is projected to yield 6.7% in 2019.

Scentre Group (SCG)

A listed Real Estate Investment Trust, SCG's property portfolio focuses on the investment, redevelopment, design, construction, leasing, management and marketing of shopping centres, primarily in regional areas in Australia and New Zealand. A beneficiary of non-cyclical flows, given its industry profile, research analysts estimate that the company will deliver an increased dividend yield to shareholders of 6.1% in the year ahead.

Suncorp (SUN)

Considered a large-cap challenger bank to Australia’s 'Big-4 Bank' oligopoly, SUN offers retail and business banking services, as well as insurance, superannuation and funds management services. While traditionally delivering a dividend yield generally below that of its larger-banking counterparts, analysts estimate that SUN will increase its dividend yield from 4.8% to 5.9%.

Commonwealth Bank of Australia (CBA)

Australia’s largest bank, the CBA, is considered the nation’s leading 'retail bank', engaging in the full gamut of commercial banking activities. The bank is one of the ASX’s largest companies by market capitalisation and finds popular appeal amongst investors because of its dividend yield. Though not the most attractive 'Big-4 Bank' on a dividend yield basis, analysts estimate CBA stock will yield 5.9 % in 2019.

What are the risks of dividend stocks?

Just looking at a share’s dividend should not be the only factor when deciding whether to buy it or not. Several risks ought to be taken into consideration before buying a stock based on its yield.

One risk to consider is interest rate risk. Dividend stocks perform well in environments where interest rates are falling, because of their “relative” appeal. Intuitively, the opposite is true in times where interest rates are rising. In such circumstances, the risk-reward of dividend stocks can change markedly.

Another risk to consider is how realistic it is that the projected dividend yield will be delivered. In some instances, a high dividend yield reflects a falling share price, or even the higher-risk profile of the company in question. In this instance, buying a share because of its yield may be undesirable.


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