Since interest rates are stuck at 2.5%, the returns from term deposits and savings accounts are terrible. However, inside the S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO) there's a whole heap of companies with dividends of 5% or more.
Whilst dividends are great ways to receive a better income from your investment, it's important you choose only the best companies to buy and hold because a significant drop in share price will quickly wipe out any benefit you'd receive from a 5% payout.
Here are four big dividend stocks which should be on your watchlist.
1. Cromwell Property Group (ASX: CMW) is a leading property investment fund which is forecast to distribute a dividend of 7.5 cents in FY14, representing a yield of around 7.6% at today's share price. With a stronger property market and low interest rate environment, earnings are expected to increase over the next two years.
2. For a consistent fully franked dividend payment, it's hard to go past Telstra Corporation Ltd (ASX: TLS). The telco giant controls a huge share of the mobiles, fixed internet and pay-tv markets here in Australia, yet is looking to grow its overseas presence. It is forecast to pay a 5.5% dividend fully franked.
3. When things go right in the insurance industry, it can be very lucrative for shareholders. Insurance Australia Group Limited (ASX: IAG) pays the biggest dividend of the big insurers, currently forecast at 6.1% fully franked.
4. Of the big banks National Australia Bank Ltd. (ASX: NAB) appears to be the cheapest and is forecast to pay the highest dividend – currently 6.1% fully franked.
The BEST buy of all
Whilst each of these companies are forecast to pay substantial dividends to eligible shareholders in the next 12 months, I believe, for now, they're best left for the watch list. That's because there's an even better dividend stock available to buy on the ASX.
