If you're in the mood for top dividend stocks the chances are you'll look at these top-five names first.
Their brands are renowned throughout Australia for superior quality and good prices but investors love them for the franked dividends, a high level of safety and modest growth prospects.
Woolworths Limited (ASX: WOW) is a name we all know and trust. However its presence goes beyond well-run supermarkets and includes brands such as Masters, Dan Murhpy's, BWS, Big W and many more. Investors have it in their portfolio as both a dividend and growth play thanks to its expanding presence in the home-improvement market. However, it appears to be fully valued in the short to medium term, trading around 20 times FY13 earnings. If investors buy in at current prices they'll have to be content in its long-term prospects.
Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) are names which many homeowners have known for a long time. With around 50% of the Australian mortgage market between them, both companies have risen on the back of booming house prices and continuous economic growth over the past 21 years. However, they're share prices currently reflect their great run and when interest rates rise, there will be downwards pressure on the lofty prices. If you own them, perhaps it's time to reconsider your holding and whether, or not, now would be a good time to sell.
If its market share you want than Telstra Corporation Ltd (ASX: TLS) is the company for you. Its continuing dominance in mobiles and fixed internet provides both great margins and cash flow which has enabled its management to invest in booming technology areas such as cloud computing, unified communications and networked services. Like Woolworths, Telstra is a long-term dividend stock worth considering.
One of the few blue-chip stocks to suffer a big setback in share price early in 2014 is Coca-Cola Amatil Ltd (ASX: CCL). It's struggle with the high Australian dollar and production costs have forced its SPC Ardmona business to record big losses whilst its ongoing price war with Schweppes is taking its toll on earnings and Indonesia's depreciating Rupiah isn't helping either. However, CCA is a cash cow that distributes brands which are second to none and whose products will continue to be in demand in 5 or 10 years. Now could be a good time to consider adding it to your portfolio.
Foolish takeaway
Although each of these stocks pay a big dividend, currently only a few appear to be a 'buy', but most deserve a spot on your watchlist in the event of a sell-off. If you're looking for more great dividend ideas why not look at other companies which are rapidly increasing their payouts and have great growth prospects…
