3 dividend picks for 2014


While many investors are comfortable to forgo the more secure dividend streams of ‘blue chip’ companies for smaller companies that offer higher dividend yields, there are also plenty of investors  – particularly those approaching retirement  –  who will forgo the slightly higher yields available, opting instead for more certainty and less risk.

So while the following three blue chip stocks may not offer the highest yields available, they do all still offer highly appealing yields for investors. (Note that property trusts and other stocks that don’t pay fully franked dividends have been excluded).

Coca-Cola Amatil (ASX: CCL) bottles and distributes arguably the world’s most recognised product, Coke. With a December financial-year (FY) end, consensus forecasts for 2014 is for a dividend of 63.5 cents per share (cps), which equates to a forecast dividend yield of 5.3%.

While all the major banks offer high yields for investors, National Australia Bank’s (ASX: NAB) historic and forecast yield makes it the most attractive bank on the yield metric. With a consensus forecast for dividends of 200.9 cps in FY 2014, the stock currently trades on a dividend yield of 5.8%.

Telstra Corp (ASX: TLS) is a perennial favourite amongst investors seeking dividends and why wouldn’t it be when it is trading on a forecast yield of 5.5%. Telstra’s diversified and entrenched customer base means its revenues are sticky and earnings reliable. This combination makes Telstra an appealing core holding in many portfolios.

Foolish takeaway

A concern of many investment advisors is that some investors may be focusing too heavily on dividends at the expense of capital growth. It’s a reasonable concern to have and is one reason why stocks that exhibit both favourable dividend and growth characteristics are the most desirable.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.