Companies with reliable revenues, strong profit margins and modestly growing earnings per share make the best dividend stocks. Add in a modest share price, strong brand name and blue-chip status and you've got yourself a solid investment case.
Here are five top companies which exemplify all the above characteristics, rendering them likely to bring greater shareholder wealth in the long-term.
Telstra Corporation Ltd (ASX: TLS) is perhaps the most reliable and well-known dividend payer on the market. Its robust margins, modest growth and franking credits enable it to find a place in most self-managed superannuation funds and income portfolios. Its forecast yield is 5.7%.
With a beaten-down share price, Coca-Cola Amatil Ltd (ASX: CCL) is ripe for the picking. Of all Australian companies its brand is perhaps the most valuable. Its products command a place on household shelves, under car seats and at movie theatres. Its forecast yield is 5.2% with 75% franking.
Speaking of movie theatres Village Roadshow Limited (ASX: VRL) – part owner of Village Cinemas – is another well-known high yielding dividend stock. In addition to cinemas, it owns Warner Bros. Movie World, Sea World, Wet'n'Wild, Outback Spectacular and produces blockbuster films such as The Great Gatsby. It yields 4.3% plus full franking.
Another theme park operator is throwing up cash. Ardent Leisure Group (ASX: AAD) – the owner of AMF and Kingpin Bowling, Dream World, White Water World, Good Life Health Clubs and much more – is steadily growing revenues and earnings in both Australia and the US. It yields 4.9% fully franked.
You might be asking: "Where's all the bank shares?" The answer: Bank stocks are overvalued. That is, all except this one. Macquarie Group Ltd (ASX: MGQ) is Australia's fifth pillar and dominant investment bank. Despite increasing some 51% in the past 12 months alone, it's trading on a forecast yield of 4.6% plus 50% franking.
Foolish takeaway
If you think you've missed the dividend rush and can't escape low interest rates, you're wrong. Looking a little further down the ASX, away from the big banks and miners, you can find some truly great companies with promising growth prospects.
