Blue chip stocks are generally regarded as Australia's largest and most well-known companies. Perhaps surprisingly, there are several stocks in the S&P / ASX 50 Index (Index: ^AFLI) (INDEXASX: XFL) currently paying higher dividends that the big four banks.
Let's take a look at four of them now.
Leighton Holdings (ASX: LEI) is trading on a trailing dividend yield of 5.3%, franked up to 50%. Leighton paid a dividend of 80 cents per share in the 2012 financial year, out of earnings of $1.33. Leighton is expected to increase its earnings per share to $1.58 and analysts are forecasting a dividend of 96 cents per share in 2013, a dividend yield of 6.4%. As a bonus, Leighton is trading on a P/E ratio of just 9.8, which appears cheap.
Insurance Australia Group (ASX: IAG) paid a 36 cent fully franked dividend in the 2013 financial year, a dividend yield of 6.3% on today's price of $5.68. In the next financial year the insurance giant that owns brands such as NRMA, SGIO, CGU and SGIC, is forecasting a drop in earnings, which could see the dividend fall slightly. On the other hand, IAG has the ability to maintain the current dividend of 36 cents based on forecast earnings.
Sydney Airport (ASX: SYD) has a trailing dividend yield of 5.8% at the current price of $3.75. As a bonus for investors in 2014, the dividend is expected to rise slightly. Given the company's monopoly position and its ability to further grow earnings and dividends, Sydney Airport is a top quality ASX blue chip stock.
Westfield Retail Trust (ASX: WRT) is paying a dividend yield of 6.9% (unfranked), and the dividend is expected to rise in the 2014 financial year. Given the strength of the Westfield brand in Australia, and the expected restructure of the Westfield companies, now could be a great time to get set in this high dividend payer.
Foolish takeaway
Investors don't have to choose between investing in the banks or leaving the cash in the bank. There are plenty of other companies paying decent dividends. As we have highlighted above, even some stocks among the top 50 companies in Australia, with well-known and respected brands, that are paying higher dividends than the banks, and in some cases appear much cheaper.