Top 10 ASX dividend stocks to watch in May 2025
Stocks yielding a reasonable dividend often make solid additions to the portfolio. These shares have been selected based on the highest-yielding dividend stocks with a dividend cover ratio of 1 or higher.
ASX dividend stocks: What you need to know
When buying shares, investors typically benefit in two ways: from capital gains due to an increase in share price, and from profits paid out in the form of dividends.
Dividend stock investors view a stock’s dividend yield as a key measure of a stock’s value. It offers an insight into how great the return on an investment will be. To calculate the dividend yield, investors simply divide the annual dividend paid by the share price.
To begin initial research, IG offers market screeners to filter out ASX stocks with the highest dividend yields.
Investors should then inspect an individual company’s financial status to determine the future viability of its dividend yield. At a minimum, this should include its historical profit generation, debt levels, and prior dividend history.
Amongst the screening criteria we use are:
- Dividend yield
- Cashflow
- Dividend growth over the last five years
- Market price correlation (beta) based on monthly price movements over the past five years
- Outlook for the next 12 months based on a slowing economy and interest rates peaking
How to trade or invest in ASX dividend stocks
1. Learn more about ASX dividend stocks
2. Find out how to trade or invest in ASX dividend stocks
3. Open an account
4. Place your trade
You can open a position on ASX dividend stocks with us either through share trading or CFD trading. Share trading means that you take direct ownership of the stock.1 By comparison, derivatives trading – such as CFD trading – allows you to take a position on the price movement of a company’s shares without actually taking ownership of them.
For a complete breakdown of the benefits and drawbacks of each strategy, please click here.
ASX dividend stocks: further important information to consider
Many investors add ASX dividend stocks to their portfolios for the long term. While this is a sound investment strategy, it also means that any errors are correspondingly magnified.
One key thing to note is that the below ‘top 10’ dividend stocks are not the highest yielding. These are stocks that appear to have a decent chance of continuing to pay out dividends, although there’s no guarantee of future success. Investors can often have higher success with lower-yielding shares of growing businesses rather than get caught in a yield trap.
Avoiding yield traps
A ‘yield trap’ is a stock with a high yield underpinned by poor financials. If a company issues a higher-than-normal dividend or its share price falls quickly, it can appear to be high-yielding. However, the yield is calculated using past figures that do not account for very recent performance.
Many investors are caught out by the siren’s song of ultra-high-yield percentages without considering the whole picture.
Often yielding stocks either have low growth potential because management pays out all the profit in dividends, or else they are cyclical stocks such as mining companies that can generate enormous amounts of cash and pay dividends for four years and then generate almost zero cash on the down cycle.
Accordingly, higher-yielding dividend stocks usually require more active management, while lower-yielding ones come closer to truly passive income. Similarly, compounding by reinvesting dividends can exponentially increase returns.
Diversifying to spread risk
It’s also worth noting that many ASX dividend stocks are blue chips with very low chances of the outsized capital gains that ASX growth stocks can deliver. It can make sense to have a mixed portfolio that offers potentially bigger returns in exchange for a little safety.
Finally, it’s important to consider the concentration or diversification of a company’s interests and revenue. Companies with the most resilient dividends are often the ones with diversified interests in their sector.
And investors should take care to spread their money across multiple sectors, to further reduce risk. Piling all of one’s capital into mining stocks might give a stellar return right now, but usually at the cost of a good night's sleep.
Remember, past performance is not an indicator of future returns.
Top 10 ASX dividend stocks to watch
These shares have been selected because they are the highest-yielding dividend stocks with a dividend cover ratio of 1 or above in May 2025. While they may not necessarily represent the best long-term growth investments, they have garnered significant investor interest.
McPherson’s Ltd (Dividend Yield: 20.8%)
McPherson’s Ltd is a household name in the personal care and beauty space, with a portfolio that includes brands such as Manicare, Dr. LeWinn’s and Lady Jayne.
The company distributes across supermarkets, pharmacies and online channels, catering to a broad consumer base in Australia and beyond. While it has faced challenges in recent years, including supply chain pressures and a competitive retail environment, McPherson’s has been working to streamline operations and refocus its brand strategy.
For income-focused investors, it’s the eye-popping dividend yield that’s likely to spark interest. With a yield of 20.8% and a healthy dividend cover of 2.7, McPherson’s is positioning itself as a high-return prospect in the consumer goods sector. The business has remained committed to returning value to shareholders, even amid volatility, which could appeal to those seeking consistent income streams in a defensive industry.
Currently, McPherson’s has a dividend yield of 20.8% with a dividend cover ratio of 2.7.
Sequoia Financial Group Ltd (Dividend Yield: 18.9%)
Sequoia Financial offers a suite of financial services across wealth management, investment platforms and legal document services, serving advisers, accountants and individuals.
The company has been expanding its footprint in the self-managed super fund (SMSF) space and continuing to build strategic partnerships that strengthen its competitive positioning. Its diversified revenue streams and focus on scalable technology platforms help to provide some insulation against broader market swings.
The company’s dividend yield of 18.9% is among the highest on the ASX, making it an appealing pick for yield hunters. With a dividend cover of 1.9, Sequoia appears to be balancing its income distribution with a sustainable earnings base. Investors looking for exposure to Australia’s ever-growing wealth management sector may see Sequoia as a high-yield entry point with growth potential on the side.
Currently, Sequoia Financial has a dividend yield of 18.9% with a dividend cover ratio of 1.9.
New Hope Corporation (Dividend Yield: 18.4%)
New Hope Corporation is a coal producer operating primarily in Queensland and New South Wales.
Its flagship asset, the Bengalla Mine, has been a reliable cash generator, and recent expansion approvals have reinforced the company’s long-term production capabilities. While coal remains a controversial sector, demand continues to hold up, particularly in export markets where energy security remains a top priority.
With a dividend yield of 18.4% and cover of 1.7, New Hope stands out as a resource stock that reliably rewards its shareholders. Its strong cash flows, underpinned by favourable coal prices and efficient operations, have allowed the company to maintain generous distributions. For investors willing to navigate the ESG debate, New Hope offers a compelling case as a high-yield, low-debt energy play.
Currently, New Hope Corporation has a dividend yield of 18.4% with a dividend cover ratio of 1.7.
Helia Group Ltd (Dividend Yield: 15.2%)
Helia, formerly Genworth Mortgage Insurance, provides lenders mortgage insurance (LMI) to Australian financial institutions, offering protection in the event of borrower default.
As property markets stabilise and housing activity begins to pick up, Helia’s earnings outlook has strengthened. The business has also been diversifying into adjacent services such as risk and capital management solutions.
A 15.2% dividend yield paired with a cover ratio of 1.5 puts Helia on the radar of investors seeking exposure to financials without direct banking risk. The company’s strong balance sheet and capital efficiency make it a standout in the insurance-adjacent space. Its dividends, underpinned by a steady premium base and prudent risk management, could be attractive for those seeking stable income from property-linked assets.
Currently, Helia has a dividend yield of 15.2% with a dividend cover ratio of 1.5.
Horizon Oil Ltd (Dividend Yield: 15.0%)
Horizon Oil is a small-cap energy company with assets primarily in Asia-Pacific, including production interests in China and Papua New Guinea.
The company’s lean structure and focus on mature, cash-generating fields have allowed it to maintain profitability even during oil price downturns. Recent market updates have pointed to strong free cash flow and continued investment in extending field life.
Its 15% dividend yield is reflective of Horizon’s focus on capital discipline and shareholder returns. With a cover ratio of 1.5, the company is striking a balance between rewarding shareholders and reinvesting for long-term stability. For investors bullish on oil prices or seeking income from resource plays without mega-cap exposure, Horizon Oil could be a rewarding addition.
Currently, Horizon Oil has a dividend yield of 15.0% with a dividend cover ratio of 1.5.
Mitchell Services Ltd (Dividend Yield: 14.3%)
Mitchell Services is one of Australia’s leading providers of drilling services to the mining sector, with a client list spanning gold, copper, coal and more.
The company has benefited from a strong commodity cycle, with sustained demand for exploration services helping to boost its earnings. A recently announced contract win with Evolution Mining is set to underpin revenue growth into FY26.
With a dividend yield of 14.3% and a notably high cover ratio of 3.4, Mitchell Services offers a mix of growth and income potential. The company’s capital-light business model, strong client relationships and healthy order book position it well to keep delivering for shareholders. It’s a play on continued exploration spend – with the added benefit of robust dividend support.
Currently, Mitchell Services has a dividend yield of 14.3% with a dividend cover ratio of 3.4.
Grange Resources Ltd (Dividend Yield: 12.8%)
Grange Resources is Australia’s only producer of high-grade magnetite from its Savage River mine in Tasmania.
Its focus on premium iron ore products, which are increasingly favoured for lower-emission steelmaking, gives it a niche in the broader iron ore market. Recent updates suggest steady production and disciplined cost control amid a volatile pricing environment.
Boasting a 12.8% dividend yield and an exceptionally strong cover ratio of 8.3, Grange stands out for its capital strength. It has a fortress balance sheet and a policy of returning excess cash to shareholders, making it a prime candidate for income investors with a taste for materials. Those bullish on decarbonisation-led demand for premium magnetite may find Grange an especially appealing pick.
Currently, Grange Resources has a dividend yield of 12.8% with a dividend cover ratio of 8.3.
Michael Hill International (Dividend Yield: 12.2%)
Michael Hill is a well-known jewellery retailer operating across Australia, New Zealand and Canada.
The brand has been investing in digital transformation, omnichannel capabilities and customer experience, while remaining true to its heritage in quality craftsmanship. The company recently reported strong holiday trading results and improved gross margins, pointing to solid consumer demand.
With a dividend yield of 12.2% and a solid cover of 10.9, Michael Hill has the financial room to continue rewarding shareholders while investing in growth. Its consistent profitability and healthy cash generation make it one of the more resilient names in retail. For those seeking yield in a consumer-facing stock, Michael Hill combines brand strength with compelling income metrics.
Currently, Michael Hill has a dividend yield of 12.2% with a dividend cover ratio of 10.9.
SkyCity Entertainment Group Ltd (Dividend Yield: 10.6%)
SkyCity Entertainment operates casinos and hospitality venues in New Zealand and Australia, including flagship properties in Auckland and Adelaide.
The company has seen a rebound in foot traffic as tourism and entertainment spending recover post-pandemic. However, it’s also navigating regulatory headwinds, including ongoing inquiries into its anti-money laundering controls.
Despite those challenges, SkyCity continues to pay an attractive dividend, with a yield of 10.6% and cover of 3.0. The company’s underlying assets – especially its prime real estate holdings and monopoly licenses – provide a valuable base for long-term income. Investors comfortable with some regulatory risk may find SkyCity an intriguing high-yield option in the leisure space.
Currently, SkyCity Entertainment has a dividend yield of 10.6% with a dividend cover ratio of 3.0.
Bisalloy Steel Group Ltd (Dividend Yield: 10.5%)
Bisalloy Steel is Australia’s only manufacturer of quenched and tempered steel plate, used in defence, mining, construction and energy applications.
The company has been growing its international presence through partnerships in Asia and the Middle East, and continues to benefit from defence spending and infrastructure demand. Its niche market positioning gives it pricing power and a stable customer base.
With a 10.5% dividend yield and cover ratio of 2.7, Bisalloy is punching above its weight in terms of shareholder returns. The company’s reliable cash flow and strategic growth initiatives support its dividend profile. For investors looking for a lesser-known industrial stock with solid fundamentals and yield appeal, Bisalloy could be one to watch.
Currently, Bisalloy Steel has a dividend yield of 10.5% with a dividend cover ratio of 2.7.
Past performance is not an indicator of future returns.
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