MENU

The 5 best dividend stocks you’ve never heard of

The big banks aren’t the only ones who pay big dividends. A number of highly promising stocks, largely unheard of, exist which could easily outpace the banks in terms of dividend growth and capital gains throughout 2014 and beyond.

You don’t have to go far to buy a top stock with fully franked dividend yields. Like most of the banks, Mortgage Choice Limited (ASX: MOC) makes a lot of its profits from selling home loans, but it can offer customers more services. Something consumers have begun to relish in recent years. Despite trading on relatively high earnings multiples, its yields 4.5% at 100% franking.

Similarly, NIB Holdings Limited (ASX: NHF) pays out a fully franked dividend of 3.8%, although it is likely to grow this year with higher earnings per share. NIB insurance continues to tap into the long-term tailwinds of an ageing population and rising premium costs. This one deserves a spot on your watchlist.

Unless you’re in default on a phone bill or bank loan, chances are you’ve never interacted with Australia’s largest debt collector, Credit Corp Group Limited (ASX: CCP). Its strong margins, including a high return on equity, minimal debt, and growing profits enable it to payout around 53% of earnings to shareholders. That represents a dividend yield of 4.3% fully franked.

Although many people may not have heard of M2 Group (ASX: MTU), its brands are recognised throughout Australia. Dodo, Eftel, Commander and Primus are its fully-owned subsidiaries in the telecommunications industry. However, M2’s growth won’t come solely from telecommunications, it also has small but growing insurance and utilities divisions. Its dividend is the icing on the cake, it currently pays 3.8% fully franked.

Lastly, RCG Corporation Limited (ASX: RCG) is a top dividend and growth stock behind some well-known retail brands across the country. It distributes brands such as Catepillar, Merrel, Saucony and operates the well-known The Athletes Foot storesIt is in a period of strong growth, opening stores and signing more distribution agreements with retailers. It has an impressive 5.7% dividend, fully franked.

Foolish takeaway

Although you may not know some of these businesses, they are reputable companies with Australia-wide brand awareness and growing revenues. They have small amounts of debt and sensible management at the helm, now could be the time to add them to your watchlist for dividend and growth potential.

BRAND NEW: #1 ASX Tech Stock for 2014 - FREE!

This ASX tech stock is ON FIRE, with the shares gaining 700% just since 2012. But the massive gains may just be beginning, says one top stock picker. You can get all the details now, free, in our brand-new investment report, "Joe Magyer's #1 ASX Tech Stock for 2014." Simply click here, it's FREE!

Motley Fool Contributor Owen Raszkiewicz owns shares in Nib Holdings and RCG Corporation. 

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.