Australia's biggest companies are known for paying big dividends compared to their international counterparts. This might be at the expense of future growth, but with franking credits it makes for very pleasing payments for shareholders.
High dividend payments may not work for every investor (particularly when tax is considered) but big dividend payers are great for retirees and people with low income.
Here are three blue chips with some of the biggest dividend yields in the ASX100:
National Australia Bank Ltd (ASX: NAB)
National Australia Bank (NAB) is one of the biggest banks in Australia. It has generated significant profits over the years thanks to Australia's unstoppable growth in the last two decades.
The business has withdrawn from its overseas activities to focus on the domestic core market. It remains to be seen whether the business should have kept its USA and UK investments because if Australia's economy takes a dip then it won't have many segments to its business that can drive growth.
I am impressed with NAB's ability to make the first move with Australia's new-age companies such as REA Group Limited (ASX: REA). This is what sets it apart from the other big banks and why I think it's worth considering for retirees.
NAB is currently trading at 12x FY18's estimated earnings with a grossed-up dividend yield of 9.34%.
Insurance Australia Group (ASX: IAG)
Insurance Australia Group (IAG) is one of Australia's largest insurance businesses. It has a multitude of brands so that it can advertise to all segments of Australia. Some of its brands include: NRMA Insurance, CGU, SGIC and SGIO.
Warren Buffett's Berkshire Hathaway recently took up a stake in IAG, which is a big vote of confidence for the business. If it's good enough for Warren Buffet then that's a good sign that the business could be good enough for you.
IAG is trading at 18x FY18's estimated earnings with a grossed-up dividend yield of 5.49%.
Crown Resorts Ltd (ASX: CWN)
Crown is one of the entertainment giants of Australia. Its hotels and casinos are huge draws for locals and tourists alike.
The tourism boom that Australia is experiencing is a big tailwind for Crown's earnings. It's looking to capitalise on this with another hotel in Melbourne and its resort project at Barangaroo in Sydney.
Crown is trading at 22x FY18's estimated earnings with a committed partially franked dividend yield of 4.77%.
Foolish takeaway
I think all three of these companies could be good choices for investors looking for a good source of income over the long-term.
I'm not too enthusiastic about the short-term prospects of the Australian economy over the next year or two so I think a better price may present itself for NAB and IAG. My preferred pick would be Crown because of its long-term plans and management-aligned shareholding.
If none of these blue chips appeal, but you are looking for dividends then I reckon these stocks could be perfect for your portfolio.
