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Here’s why BHP Billiton Limited’s 4.8% dividend is worth a closer look

While interest rates look set to remain at their lows for some time yet, investors are of course going to continue searching for high-yielding dividend stocks.

Compared to some of the more traditional dividend plays, like Commonwealth Bank of Australia (ASX: CBA) and Telstra Corporation Ltd (ASX: TLS), BHP Billiton Limited (ASX: BHP) certainly presents as an attractive option going forward.

For starters, it has actually underperformed the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) over the last few years, which makes it seem like a better buy today given the miner is maintaining a heavy focus on reducing costs and improving productivity going forward.

The other reason BHP Billiton could start turning heads is its forecast 3.3% fully franked dividend yield. Grossed up, that’s a 4.8% dividend, which certainly beats the returns from term deposits and various other ASX stocks.

BHP Billiton has risen 7.4% this month and is now trading at $38.55. It is still sitting 3.1% below its 52-week high achieved in February.

A grossed-up yield of 7%... plus double-digit profit growth!

NEWLY UPDATED. The Motley Fool's Top Dividend Stock for 2014 offers growing sales, accelerating profits and a grossed up dividend yield of 7%! Find out the name and code right now -- your copy of "The Motley Fool's Top Dividend Stock for 2014" is FREE. Simply click here!

Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.

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