Many investors still seem to be obsessed with Telstra Corporation Ltd's (ASX: TLS) expected 29 cents per share (cps) dividend which at the current share price equates to a fully franked dividend yield of 5.4%. While it is indeed one of the highest, maintainable yields on offer from blue-chip stocks it's far from the only one.
A review of the largest Australian companies highlights that not only can investors achieve as good, if not better yields than Telstra's, but there are blue-chip stocks which could also offer higher capital gains potential.
Insurance Australia Group Limited (ASX: IAG)
The share price of IAG has recently found some support after touching a one-year low in March. Despite the volatility in the insurer's share price, analyst consensus figures have the dividend payout remaining very steady. In FY 2015, IAG is forecast to pay a dividend of 36.2 cps. This equates to a yield of 6.1% at the current share price.
National Australia Bank Ltd. (ASX: NAB)
NAB is currently offering the highest dividend yield of the 'Big 4' banks. With one consensus forecast showing the dividend will rise from 201.8 cps this financial year to 214.8 cps in FY 2015, NAB trades on a hefty forward yield of 6.4%.
Coca-Cola Amatil Ltd (ASX: CCL)
CCA's share price has come under pressure in the past year as investors have sold the stock down due to concerns regarding certain operational issues and structural challenges. While the dividend in the current financial year (FY) 2014 is expected to fall to 44.5 cps, the dividend is expected to bounce back to 51 cps in FY 2015, implying a yield of 5.3%. Importantly there could also be the potential for a share price re-rating if the market becomes more comfortable with the beverage maker's outlook.
Given that CCA has faced some recent troubles while the Australian banking industry has been enjoying a tailwind, on balance there would appear to be more upside to the earnings of CCA than NAB. Meanwhile IAG's acquisition of Wesfarmers Ltd's (ASX: WES) insurance underwriting business has the potential to be earnings accretive.
However CCA's balance sheet has less inherent risk in it than either a bank or an insurer, so although CCA is trading on a lower yield it would appear to be the more enticing investment proposition given the scope for a rise in future earnings and dividends.
