Want to watch your money grow? Dividend stocks could be your golden ticket to financial freedom. But with countless options on the ASX, where do you start? Fear not; we've done the digging for you. Here are five ASX stocks that could be your next big dividend win.
1. Commonwealth Bank of Australia (ASX: CBA)
Commonwealth Bank of Australia (CBA) is a heavyweight in the dividend space on the ASX, contributing over 8% of the total dividends in the ASX 200 index. CBA's dividend performance has been noteworthy, with a 17% increase in 2023 compared to the previous year and modest growth continuing into 2024.
Since 2013, CBA’s dividend growth has been relatively slow, with a compound annual growth rate (CAGR) of less than 2%. However, the outlook is more optimistic, with analysts predicting a growth rate exceeding 3.5% per year over the next five years.
CBA’s commitment to maintaining capital above regulatory minimums and avoiding risky expansion plans or expensive acquisitions bodes well for its dividend stability. Currently, the bank boasts $3.1 billion in surplus capital, which is above the top-end of its target range. This surplus provides ample cash for dividend payments, and analysts view CBA’s target payout ratio of 70%-80% as sustainable and reasonable.
2. SRG Global Ltd (ASX: SRG)
SRG Global is another top ASX dividend stock worth considering. As a diversified industrial services group, SRG provides multidisciplinary construction, maintenance, production drilling, and geotechnical services. The company’s diverse operations are well-positioned to benefit from government-stimulated construction activities.
According to Bell Potter, SRG’s short-to-medium term outlook is robust, driven by this construction activity. The broker expects SRG to deliver fully franked dividends of 4.7 cents per share in FY 2024 and 6.7 cents per share in FY 2025. With its current share price at 89 cents, these dividends translate to yields of 5.3% and 7.5%, respectively. Bell Potter has given SRG a buy rating and set a price target of $1.30 on its shares.
3. Myer Holdings Ltd. (ASX: MYR)
Myer Holdings Ltd. (Myer) is a prominent player in the Australian retail sector and presents an attractive dividend opportunity. Despite facing challenges in the past, Myer has been making significant strides to improve its financial health and shareholder returns. The company’s recent focus on cost reduction, store optimisation, and enhancing online sales channels has started to yield positive results.
Recently, Myer declared a dividend amount of AU$0.03 per share, with a 100% franking percentage. The ex-dividend date was March 27, 2024, and the payment date was May 16, 2024. At the current share price of AU$0.79, this gives Myer a dividend yield of approximately 5.06%.
With a strong balance sheet and improved cash flow, Myer has been able to resume dividend payments, much to the delight of its investors. Myer’s consistent dividend history reflects its commitment to rewarding shareholders, making it a noteworthy choice for income-focused investors.
4. Healthco Healthcare and Wellness REIT (ASX: HCW)
The team at Bell Potter is very enthusiastic about Healthco Healthcare and Wellness REIT, viewing it as a top ASX dividend stock to buy right now. Healthco focuses on health and wellness assets, such as hospitals, aged care facilities, and primary care properties.
Bell Potter believes that Healthco will be in a position to pay dividends per share of 8 cents in FY 2024 and 8.3 cents in FY 2025. Based on the current unit price of $1.13, this results in impressive dividend yields of 7.1% and 7.35%, respectively. Given its strong potential as a dividend investment, the broker currently has a buy rating and a $1.50 price target on its shares.
5.Westpac Banking Corporation (ASX: WBC)
Westpac Banking Corporation, one of Australia’s leading banks, stands out as one of the top ASX dividend stocks to buy right now. Known for its consistent dividend payments, Westpac offers attractive returns for income-focused investors.
WBC recently distributed 75 cents per share as a special dividend and 15 cents as an interim ordinary dividend per share. Both dividends were announced on May 6, 2024, and are 100% franked with Australian franking credits at the company tax rate of 30%. Additionally, they carried New Zealand imputation credits of NZ 0.06 cents per share and NZ 0.012 cents per share, respectively.
Westpac’s DRP allows eligible shareholders to reinvest their dividends in additional Westpac ordinary shares with no transaction costs. The market price for the DRP was $26.64 per share. Westpac typically pays dividends twice a year, in June and December. Its long-standing history of dividend payments dates back to 1983, reflecting its commitment to rewarding shareholders.
Westpac’s consistent dividend payments and impressive yield make it a compelling choice for investors looking for reliable income streams. Always consider your investment goals and stay informed about the company's financial health when making investment decisions.
Selecting the right ASX dividend stocks involves considering factors such as dividend yield, growth potential, and the stability of the underlying business. Commonwealth Bank of Australia, SRG Global, Myer Holdings, Healthco Healthcare and Wellness REIT, and Westpac Banking Corporation offer compelling opportunities for dividend-focused investors. By incorporating these stocks into your portfolio, you can enjoy a steady stream of income while benefiting from their growth prospects. Always remember to conduct thorough research and consult with financial advisors to tailor your investment strategy to your specific goals and risk tolerance.
