The Motley Fool

Your instant 5 share dividend portfolio

The dividends paid by corporations can be an important factor for investors when considering which companies to invest with. They can provide a steady flow of income for retirees or a new source of capital to invest with for investors trying to expand their portfolio.

However, there are other things that investors should consider when investing in dividend stocks. For instance, while a company might pay an attractive dividend its growth prospects might be limited (which would likely limit its share price from climbing). Likewise, although a dividend yield might look appealing, if the stock is overpriced it could very well fall in value, thus reversing any gains made.

Investors looking for high-yielding dividend stocks in 2014 should look beyond the big four banks. Each rose strongly in 2013 and stand little chance of delivering market-beating returns in the long run. Instead, here are five companies to consider:

Telstra Corporation Ltd (ASX: TLS): Telstra is a very widely held stock by Australians. Although its shares have rallied strongly for three years, the company continues to strengthen its grasp over the telecommunications industry and will benefit from an increase in the usage of smart phones and the internet. At today’s price of $5.26 per share, it has a trailing fully franked dividend yield of 5.4%.

Westfield Group (ASX: WDC): Shares in the global shopping-centre giant experienced a setback in 2013, falling as concerns regarding the future of the brick-and-mortar retail industry gripped investors. However, the company has focused on strengthening its balance sheet and redeveloping its strongest assets. It has a current yield of 5%.

BHP Billiton Limited (ASX: BHP): Although there are risks facing the mining sector, BHP is heavily focused on cutting costs and improving productivity. The company will benefit from a lower Australian dollar and a resilient iron ore price. It will likely increase its dividend distribution in the coming year, as a response to heavy shareholder pressure. It has a trailing fully franked yield of 3.2%.

Collection House Limited (ASX: CLH): While the receivables management company (debt collector, to you and I) has a strong record of growth, it also pays a very attractive dividend. Shares are currently trading on a price-to-earnings ratio of 12.5 at $1.77 per share. It offers a 4.2% fully franked dividend.

Myer Holdings Ltd (ASX: MYR): The department store giant currently has a trailing dividend yield of 6.3%, which is also fully franked. The company should continue to benefit from a low interest rate environment and growing consumer confidence.

Want the name of our best dividend stock for 2014 – absolutely FREE?

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

Related Articles...

Latest posts by Ryan Newman (see all)