Top 5 ASX dividend stocks of the past 2 years

Since interest rates started falling from 4.75% in November 2011, some of Australia’s favourite blue chip stocks, renowned for their dividend yields, have risen extremely well and increased their return to shareholders.

Here are the top five dividend stocks (with yields above 4%) from the S&P/ASX 20 (ASX: XTL) over the past two years, as chosen by the market’s stock price return.

1. Macquarie Group (ASX: MQG) is Australia’s leading investment bank and has grown its share price 106% since November 2011. The bank is quickly closing the gap on the big four banks as it focuses on becoming a full-service financial institution. In recent years it has made significant acquisitions and expanded overseas. Investors have been drawn to its rebounding growth and attractive dividend yield of 4.2%.

2. Telstra’s (ASX: TLS) stock price has gone from strength to strength in the past two years, rising 66% and paying out its legendary dividend in the process. After reaching a 52-week high of $5.17 its share price has drifted sideways. However, a renewed focus on customer service, international expansions and network superiority should see Telstra grow modestly for years to come.

3. Suncorp (ASX: SUN) was left with $17 billion in ‘bad’ commercial loans after the GFC. Paying down its “bad bank” portfolio has been a priority in recent years and, as such, its share price lingered. However, dedicated management and a special dividend have helped it pay off that debt and climb 54% in the past two years. It currently boasts a dividend of 4.8% fully franked.

4. Commonwealth Bank (ASX: CBA), Australia’s biggest bank has, like many of the big four, excelled in growing profits and returns to shareholders when others around the world struggled to keep their head above water. Despite its immense size, Commonwealth has grown profits by $1.3 billion and its dividend by 14% in the past two years alone – over that time its shares have risen 54%.

5. Westpac’s (ASX: WBC) share price, like ANZ and Commonwealth’s, has climbed higher as investors rode the dividend-seeking wave. Westpac’s focus on the domestic economy has helped it secure more than 20% of the mortgage market and it continues to pay one of the best dividends of Australia’s top 20 public companies (currently yielding 5.1% fully franked). From this time two years ago, it’s up more than 53%.

Foolish takeaway

Australian investors’ thirst for strong, stable dividends doesn’t appear to have been quenched and some of the top stocks on the ASX are still pushing higher. However, at current prices, many are too expensive (therefore too risky) to justify a buy rating and in coming months we are likely to see many small and medium sized companies (who pay strong dividends) become the beneficiaries of new money entering the stock market.

One stock idea we’ve identified sits nicely in this space and is likely to not only pay a great dividend but grow profits as well. You can have it for free as part of our brand new research report, including a full investment analysis! Simply click here for your FREE copy of “The Motley Fool’s Top Dividend Stock for 2013-2014.”

Motley Fool contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.  

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