Top 5 ASX dividend stocks to watch in July 2021

This month, we spotlight five dividend-focused companies that investors may consider worth watching in the month(s) ahead.

Australian markets edge higher

The ASX 200 benchmark has ticked higher in the last month, opening at the 7,265 point mark on Friday, 2 July – representing a gain of a little over 1%. The index continues to flirt with the all-time highs it set in June, as investors become seemingly more bullish on the outlook for corporates and the economy more broadly.

With Australian equities trading around all-time highs, below we look at five dividend stocks that Australian investors may consider worth watching in July and beyond.

The general criteria for these ‘top’ dividend stocks include: a solid dividend yield and a consistent history of dividend payments. The data below is sourced from MSN Money and company data, where appropriate.

Best 5 dividend stocks to watch in July 2021

Last month we looked at a number of ASX-listed, high yielding dividend stocks, including: Aurizon, Rio Tinto, Amcor, JB Hi-Fi, and Harvey Norman.

Yet the ASX is home to many ‘high yielding’ stocks, especially when compared to other markets, such as the US. As such, below we look at another five dividend stocks for investors to consider, including:

Company

Sector

Last Dividend

Dividend Yield

Scentre

Real Estate

7 cents

6.68%

Spark New Zealand

Communication Services

12.5 cents

5.43%

Origin Energy

Utilities

12.5 cents

5.16%

AusNet

Utilities

4.75 cents

4.99%

BHP Group

Basic Materials

131.1 cents

4.25%

Scentre dividend yield: 6.68%

With a market capitalisation of over $14 billion, Scentre Group represents one of Australia's largest real estate investment trusts (A-REITs). Specifically, the REIT owns and operates the iconic Westfield properties across Australia and New Zealand.

The Group has also developed a history of delivering strong yields for passive investors, with Scentre most recently making a distribution of 7 cents per security.

Looking forward, as part of its first quarter operational update, the company said 'subject to no material change in conditions,’ it expected to distribute 14 cents per security in FY21.

Finally, examining the company’s distribution policy, as is noted on Scentre’s website, the:

‘Proposed distribution policy will be to pay out up to 100% of FFO. The policy allows for retention to fund capital expenditure requirements as determined from time to time by the Scentre Group Board, and is subject to review by the Scentre Group Board at its discretion, including in relation to general business and financial conditions.’

Spark New Zealand dividend yield: 5.43%

ICT and telecommunications company Spark New Zealand has performed consistently – but not spectacularly in recent times – with the stock gaining a little over 2% since January, to open Friday's session at $4.52 per share.

From a dividend perspective, Spark last paid an interim dividend of 12.5 cents per share (100% imputed). Looking forward, the company said it expects to maintain a full-year dividend of 25.0 cents per share, also 100% imputed.

The company has a dividend reinvestment plan open to eligible investors.

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Origin Energy dividend yield: 5.16%

The Origin Energy share price has come under heavy selling pressure in the last year, with the stock down 24.50% in that period.

Despite that, the energy player continues to pay a consistent (albeit historically lower) dividend, most recently paying a dividend of 12.5 cents per share (unfranked), representing 34% of interim free cash flow.

As with many other companies, Origin offers a Dividend Reinvestment Program that eligible shareholders can participate in.

Looking at the company’s dividend policy, as noted in the latest interim report:

'Going forward, the board continues to target a payout ratio of 30 to 50 per cent of free cash flow per annum, and will consider a combination of ordinary dividends and on-market share buybacks.'

AusNet Services dividend yield: 4.99%

AusNet Services owns and operates the Victorian electricity transmission network as well as a number of gas distribution networks in Victoria. The company also offers commercial energy and infrastructure products and services to the public and private sector. Interestingly, a significant portion of AusNet is owned by international interests.

Most recently, AusNet paid a dividend of 4.75 cents per share, franked at 40%. At those levels, AusNet has an implied dividend yield of 4.99%.

BHP group dividend yield: 4.25%

As with Rio Tinto, which we discussed last month, BHP Group has benefitted from a run-up in in commodity prices over the last year, with iron ore in particular representing a key headwind for the miner.

Off the back of that, BHP has continued to pay a strong and consistent dividend, with the miner’s last dividend coming in at $1.31 per share.

Looking at the BHP’s dividend policy, the company states on its website that:

‘The BHP dividend policy provides a minimum 50% payout of Underlying attributable profit at every reporting period. The Board will assess, every reporting period, the ability to pay amounts additional to the minimum payment, in accordance with the capital allocation framework.’

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