Australia’s top 10 blue-chip income stocks

Relative safety and a great yield, what more could you ask for?

Investors all around the world are obsessed with income. The best example of this is the major European banks who have purchased so many Spanish and Irish Government bonds that they are now yielding below that of Australia.

This is despite these economies still being fundamentally unstable, with high account deficits, high unemployment and low interest rates to spur their economies.

Yield Focus to Remain

I am of the opinion that the hunt for yield will continue through the rest of 2014 and likely well into 2015 as Europe is just now entering a new stimulus period, the U.S. has predicted that interest rates will be staying low for the foreseeable future, and Australia is in a similar position.

Even the longest five-year term deposits entered into back in 2009 are now coming up to completion. More and more investors and retirees are being forced into the share market in order to receive a decent income as the best term deposits are earning just over 4% before tax.

These investors are looking for big, reliable names that should be relatively resilient in any share market or economic downturn. As a result, I’ve pulled together a list of the top 10 dividend-yielding blue-chip stocks (as defined by market cap) and listed them below with their trailing yield.

The top 10

  1. CFS Retail Property Trust 1 (ASX: CFX), 6.4% yield, 0% franking
  2. Insurance Australia Group Limited (ASX: IAG), 6.2% yield, 100% franking
  3. Westfield Retail Trust (ASX: WRT), 6.1% yield, 0% franking
  4. Stockland Corporation Ltd (ASX: SGP), 6% yield, 0% franking
  5. National Australia Bank Ltd. (ASX: NAB), 5.9% yield, 100% franking
  6. Woodside Petroleum Limited (ASX: WPL), 5.8% yield, 100% franking
  7. Coca-Cola Amatil Ltd (ASX: CCL), 5.6% yield, 75% franking
  8. Telstra Corporation Ltd (ASX: TLS), 5.5% yield, 100% franking
  9. DEXUS Property Group (ASX: DXS), 5.3% yield, 0% franking
  10. Sydney Airport Holdings Ltd (ASX: SYD), 5.3% yield, 0% franking

Overall, the group has a couple of names that have suffered over the past 12 months, and some that have been long-term outperformers. These 10 stocks have solid outlooks over the long term, but capital gains may be limited due to their size and gains over the past 24 months.

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