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Boost returns in 2014 with these 6 big dividend stocks

Income! Income! Income! Self managed super fund trustees, conservative investors, and those still struggling to recover from losses during the GFC continue to pour money into Australia’s biggest and brightest companies delivering large, sustainable dividend yields.

The big banks, Telstra Corporation Ltd (ASX: TLS) and some of the best real-estate investment trusts have seen strong share price performance over the last three of years due to their strong yields and consistent earnings growth. While demand for these stocks are unlikely to drop in the near future due to their perceived safety, their yields have dropped due to the popularity and investors are now starting to look for other opportunities in smaller large caps and mid-cap companies.

Instead of Telstra, investors could consider Vita Group Limited (ASX: VTG), which runs around 170 Telstra stores and Telstra business centres and is expected to deliver a spectacular yield of around 6.5% fully franked in 2015. This compares well with Telstra’s 6% yield but Vita is expected to grow revenue faster than Telstra as it continues to transform and expand the business.

In the mining space, the biggest miners are expected to yield between 3% and 4% next year,  however much larger yields of 4.9% and 7.9% are available from smaller rivals Fortescue Metals Group Limited (ASX: FMG) and Arrium Ltd (ASX: ARI) respectively.

In insurance, in years gone by investors flocked to QBE Insurance Limited (ASX: QBE) for its 5% to 6% yield, however recent poor performance has limited its payout to an expected 3.5% next year. A quality alternative is Insurance Australia Group Limited (ASX: IAG) that paid out a whopping 6.2% fully franked this year and is expected to do the same next year.

In energy, Santos Limited (ASX: STO) appears the best and most stable option, with a forecast yield of around 4.5%, while the dividend pick of Australia’s internet companies has to be Webjet Limited (ASX: WEB) for its near 6% yield.

Where to now?

Investors looking for dividends can be rewarded by searching outside of the ASX’s biggest names. The six companies above, perhaps with the exception of Fortescue and Arrium, provide investors with great dividend yields without significantly raising the level of risk in the investment.

Alternatively, are you interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2014."

Motley Fool contributor Andrew Mudie owns shares in FMG and QBE. You can find Andrew on Twitter @andrewmudie

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