4 blue-chip stocks with dividend yields greater than 5%

If you’re in the market for income stocks, these should be on your watchlist.

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Since interest rates are stuck at 2.5%, the returns from term deposits and savings accounts are terrible. However, inside the S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO) there’s a whole heap of companies with dividends of 5% or more.

Whilst dividends are great ways to receive a better income from your investment, it’s important you choose only the best companies to buy and hold because a significant drop in share price will quickly wipe out any benefit you’d receive from a 5% payout.

Here are four big dividend stocks which should be on your watchlist.

1. Cromwell Property Group (ASX: CMW) is a leading property investment fund which is forecast to distribute a dividend of 7.5 cents in FY14, representing a yield of around 7.6% at today’s share price. With a stronger property market and low interest rate environment, earnings are expected to increase over the next two years.

2. For a consistent fully franked dividend payment, it’s hard to go past Telstra Corporation Ltd (ASX: TLS). The telco giant controls a huge share of the mobiles, fixed internet and pay-tv markets here in Australia, yet is looking to grow its overseas presence. It is forecast to pay a 5.5% dividend fully franked.

3. When things go right in the insurance industry, it can be very lucrative for shareholders. Insurance Australia Group Limited (ASX: IAG) pays the biggest dividend of the big insurers, currently forecast at 6.1% fully franked.

4. Of the big banks National Australia Bank Ltd. (ASX: NAB) appears to be the cheapest and is forecast to pay the highest dividend – currently 6.1% fully franked.

The BEST buy of all

Whilst each of these companies are forecast to pay substantial dividends to eligible shareholders in the next 12 months, I believe, for now, they’re best left for the watch list. That’s because there’s an even better dividend stock available to buy on the ASX.

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

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