Nothing warms an investor's heart like getting paid a dividend. It's that little perk you get while you wait for a share price to go up. With interest rates low, bank deposit accounts don't pay high interest, so there's no warmth there.
For long-term investors, a good portion of their future returns may come from dividend income, so all those cents per share over the years can add up and give you even more capital to invest with.
Let's look at two stocks paying a dividend yield over 5% that could help you build a strong financial future.
Telstra Corporation Ltd (ASX: TLS)
The telecom giant is the biggest mobile phone and broadband service operator and is a 50% owner of Foxtel pay TV along with Twenty-First Century Fox Inc (ASX: FOX). It has over 15 million mobile users and operates Bigpond, the largest network of home internet users.
Its share price hit a 52-week high of $5.36 this week, yet it still has a high dividend yield of 5.4%. After years of having a rock solid 28 cents per share annual dividend, it upped the interim dividend to 14.5 cps, making shareholders even happier.
One way the company plans to drive revenue is by leasing out its existing copper network infrastructure for the rollout of the national broadband network. That will pay the company hundreds of millions of dollars annually for many years, helping earnings and dividend growth.
Woodside Petroleum Limited (ASX: WPL)
The $33 billion oil and gas producer's stock is offering a 5.7% dividend yield currently. In 2013, it gave shareholders a special dividend of US$0.63 a share along with a US$1.03 a share final dividend. New investors who missed out on receiving that may have another chance.
The company just announced that it will stop its plan to be part of the Leviathan LNG project, located offshore near Israel. The investment was to be around US$2.5 billion. The progress of the plan was not going the way it wanted, so it pulled out.
This means funds are free for other potential acquisitions. However, if there isn't much merger and acquisition activity in the near-term, CitiGroup analyst Dale Koenders speculates that the company could potentially pay out another special dividend.
