Dividends can be one of the most important considerations for Australian investors, especially those who are looking to live off the income their shares provide. Well-established blue-chip companies like the banks are less likely to see substantial share price growth over many years, so dividends are often seen as the key reason to invest in them.
Given the importance of dividends and the difficulty investors have had over the last few years finding a sustainable payout due to the aftermath of global disruptions, we thought we would put together a list of non-banking best dividend stocks to keep an eye on in 2024.
To help generate a list, we reached out to Bell Direct's head of distribution Tim Sparks who sent us 20 thought starters you might keep your eye on in 2024.
Unfortunately there's no one magic stock that is 'best' for everyone. Instead, you should look into your own portfolio, your individual needs and your investment strategy to decide what stock is right for you. Further still, nobody can say for certain which direction a share will go as past performance is no guarantee of future results. So keep in mind these are stock ideas only and should not be taken as personal financial advice.
Please note the below are not share trading recommendations. They are simply investing ideas. Before trading you should do your own research to determine if any of the below are right for you.
All below data is as of 05 September 2024.
Yancoal Australia Ltd sits in the energy minerals sector, boasting a market capitalisation of $9.36 billion. The company has an attractive dividend yield of 9.48%, including a payout of $1.07 per share in 2023. Yancoal oversees extensive operations in New South Wales, Queensland and Western Australia with a history of contributing over $10 billion in foreign direct investment to Australia since 2004.
While the dividend yield is significant, it's also closely tied to the volatile coal market, a factor for investors to consider due to its impact on the company's financial distributions.
WAM Capital Ltd is an investment company within the finance sector, boasting a market capitalisation of $1.68 billion and operating out of NSW, Australia. The company upheld a consistent dividend payment in the 2023-34 financial year, with a full-year dividend matching the previous year at 15.5 cents per share.
Operating in the materials sector, Fortescue Ltd boasts an impressive market capitalisation of $58 billion and is the world's fourth largest iron ore producer. It is currently based out of Perth, Western Australia and is a top 10 ASX listed company.
Fortescue has been a consistent performer for shareholders and also regularly distributes dividends. It has a dividend yield of 10.78% (September 2024), and a healthy 31.19% profit margin.
APM Human Services International Ltd operates in the human services sector, providing a range of health and employment services. The company boasts a dividend yield of 10.60%, indicating its strong shareholder returns. With a P/E ratio of 17.68, APM demonstrates a balanced valuation in its market segment.
Fletcher Building is a New Zealand company that has been operating since 1915. Today, it operates across New Zealand, Australia and the South Pacific and it has a market capitalisation of $2.26 billion. Operating in the capital goods industry, Fletcher Building engages in manufacturing, home building, construction and infrastructure, distribution and retail. It currently employs almost 15,000 people.
Fletcher Building is listed on both the ASX and NZX and currently has a dividend yield of 10.45% (September 2024).
McMillan Shakespeare Ltd operates within the financial sector, offering salary packaging and vehicle leasing services. The company, with a market capitalisation of $1.25 billion and more than 1,300 employees as of 2024, has established itself as a key player in financial outsourcing.
Pilbara Minerals Ltd, a standout in the non-energy minerals sector, boasts a market capitalisation of $8.82 billion, highlighting its significant presence on the ASX. The company attracts with a dividend yield of 9.56% and a P/E ratio of 6.51, underscoring its value proposition against earnings.
Its impressive net profit margin of 51.85% showcases operational efficiency and profitability. For those exploring opportunities within non-energy minerals, Pilbara Minerals Ltd's financial health and performance metrics suggest it's a contender worth considering.
IGO Ltd, with a market capitalisation of $4.2 billion, marks its territory in the non-energy minerals market, illustrating its robust position. The company offers investors a dividend yield of 9.91% and a P/E ratio of 17.34, reflecting its financial stability and growth prospects.
A net profit margin of 24.46% indicates effective management and a strong financial framework. For investors drawn to the sector, IGO Ltd might present itself as an engaging option, backed by solid market capitalisation and promising financial metrics.
ResMed is a California-based medical equipment company. Originally founded in Australia, it moved to San Diego in 1992 and now specialises in devices for respiratory conditions. It currently pays a dividend yield of 8.99% at a P/E ratio of 35.3.
BSP Financial Group Ltd is a key player in the finance sector. The company offers a dividend yield of 8.68%, showcasing its commitment to delivering significant returns to investors. The P/E ratio of 8.97 suggests a relatively attractive valuation relative to its earnings.
Remarkably, BSP Financial Group boasts a high net profit margin of 33.72%, indicating exceptional profitability and financial management in its operations.
Metrics Master Income Trust Unit, with a market cap of $2.2 billion, invests in Australian corporate loans aimed at delivering stable income mainly through interest payments.
It has had a relatively flat 2024, up 0.73% since the start of the year.
Insignia Financial Ltd is a financial services company based in Melbourne with a market capitalisation of $1.47 billion. The company has reduced its dividend to $0.093, resulting in an 8.69% yield.
Insignia's dividend history shows volatility with an average annual decline of 7.8% over the last decade. The company's earnings per share (EPS) have been declining over the 2018–23 period.
Atlas Alteria is a global transport operator which specialises in toll roads. It currently has projects in France, Germany and the US and a market capitalisation of $7.6 billion. One of the company's notable projects is the Chicago Skyway, a 12.5km elevated toll road in which the company owns a 66.67% interest.
Overall, Atlas Arteria offers investors an opportunity to invest in a stable and diversified toll road portfolio, with a history of strong financial performance and a commitment to delivering returns through dividends.
Deterra Royalties is a Perth-based mining royalties company and the first company to apply a mining royalty business model in Australia. It acquires and manages a portfolio of mining assets, focusing on bulks, base and battery metals.
It currently has a net profit margin of 64.40% and a P/E ratio of 12.59.
Growthpoint Properties Australia is a real estate investment trust listed on the ASX with a market capitalisation of $1.76 billion. It has maintained a dividend yield of approximately 8.50%, but its share price is currently down 1.5% in 2024.
A telecom and digital services company, Spark New Zealand is one of the largest companies on the New Zealand Exchange (NZX) and is also listed on the ASX. It currently has a P/E ratio of 20.81, and offers a 7.68% dividend to investors.
Liberty Financial Group Pty Ltd, functioning in the finance sector, offers a range of lending and financial services. The company provides a dividend yield of 8.72%, demonstrating its ability to generate investor returns.
Its P/E ratio is 20.81, indicating a reasonable market valuation compared to its earnings. The net profit margin of 8.18% showcases Liberty Financial Group's strong profitability and effective financial management.
New Hope Corporation, based in Australia, is a diversified energy company with significant interests in coal mining, exploration, and development. As of 2023, the company maintains a strong market presence with a market capitalisation of $4.3 billion, demonstrating its robust position in the energy sector.
New Hope Corporation is known for its efficient operations and commitment to sustainable mining practices. With a dividend yield of 7.97%, it offers investors a competitive return, indicative of its steady financial performance. The earnings per share stand at $0.24, reflecting the company's ability to generate consistent profits and maintain a healthy dividend payout for its shareholders.
Woodside Energy Group, with a market cap of $52.4 billion, stands as Australia's largest independent oil and gas company. The company's dividend yield is significant at 7.59% as of September 2024, with a net profit margin of 14.76%.
SkyCity is a gambling and entertainment company based in Auckland, New Zealand. Founded in 1996, it owns and operates 5 casinos and 3 luxury hotels in Australia and New Zealand, as well as Auckland's Sky Tower.
We filtered Australian stocks that had been public for at least 5 years with market caps of over $1 billion and then selected the 20 stocks with the highest yield.
Debt-to-equity (D/E) ratio: Compares a company's level of debt to its amount of shareholder equity. Generally speaking, the higher the ratio, the more leveraged a company is, although this ratio will differ broadly across sectors.
Price-earnings (P/E) ratio: The relative value of a company's stock price to its recent profit results, i.e. the price investors are paying for every dollar of profit the company makes. A high P/E ratio might indicate investors expect growth to occur in the future and are willing to pay more for it, or it can also indicate the stock is overpriced.
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Dividend investors will typically look for the following attributes when selecting their ASX dividen stocks:
Bell Direct's head of distribution Tim Sparks also gave the following tips:
"When searching for dividend stocks, investors should be looking for companies with consistent, reliable cash flows from a product or service with a clear competitive advantage. Ultimately it is profit from these cash flows that will lead to dividends," Sparks says.
He also cautioned investors of the risks of dividend traps, highlighting the need to analyse 2 key metrics before purchasing dividend shares.
"The first is to look at the company's historical dividends to make sure they are consistent. The second – look at the company's dividend payout ratio and ensure it didn't suddenly increase based on a one-off event," Sparks explains.
"The average dividend yield for an ASX 200 company is about 4%. If a stock is yielding say 15% then it is unlikely this can be maintained and that stock needs further analysis to avoid disappointment."
To buy dividend stocks, you'll need to sign up to an online broker. You can use the table below to compare online brokers (also known as share trading platforms) available in Australia.
Important: The standard brokerage fee displayed is the trade cost for new customers to purchase $1,000 of either Australian or US shares. Where a platform charges different fees for both US and Australian shares we show the lower of the two. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Image source: Getty
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
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A dividend is the distribution of some of a company's profits that are paid regularly to its shareholders.