3 extraordinary blue-chip stocks paying over 5.3% dividend yields

Forget Telstra, there are even better dividend yields on offer.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Many investors still seem to be obsessed with Telstra Corporation Ltd’s (ASX: TLS) expected 29 cents per share (cps) dividend which at the current share price equates to a fully franked dividend yield of 5.4%. While it is indeed one of the highest, maintainable yields on offer from blue-chip stocks it’s far from the only one.

A review of the largest Australian companies highlights that not only can investors achieve as good, if not better yields than Telstra’s, but there are blue-chip stocks which could also offer higher capital gains potential.

Insurance Australia Group Limited (ASX: IAG)

The share price of IAG has recently found some support after touching a one-year low in March. Despite the volatility in the insurer’s share price, analyst consensus figures have the dividend payout remaining very steady. In FY 2015, IAG is forecast to pay a dividend of 36.2 cps. This equates to a yield of 6.1% at the current share price.

National Australia Bank Ltd. (ASX: NAB)

NAB is currently offering the highest dividend yield of the ‘Big 4’ banks. With one consensus forecast showing the dividend will rise from 201.8 cps this financial year to 214.8 cps in FY 2015, NAB trades on a hefty forward yield of 6.4%.

Coca-Cola Amatil Ltd (ASX: CCL)

CCA’s share price has come under pressure in the past year as investors have sold the stock down due to concerns regarding certain operational issues and structural challenges. While the dividend in the current financial year (FY) 2014 is expected to fall to 44.5 cps, the dividend is expected to bounce back to 51 cps in FY 2015, implying a yield of 5.3%. Importantly there could also be the potential for a share price re-rating if the market becomes more comfortable with the beverage maker’s outlook.

Given that CCA has faced some recent troubles while the Australian banking industry has been enjoying a tailwind, on balance there would appear to be more upside to the earnings of CCA than NAB. Meanwhile IAG’s acquisition of Wesfarmers Ltd’s (ASX: WES) insurance underwriting business has the potential to be earnings accretive.

However CCA’s balance sheet has less inherent risk in it than either a bank or an insurer, so although CCA is trading on a lower yield it would appear to be the more enticing investment proposition given the scope for a rise in future earnings and dividends.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

asx share price competitions represented by businessmen arm wrestling
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

person reading news on mobile phone
⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »