The Motley Fool

Australia’s gold medal dividend champions

For many years, Australians have flocked to the big four banks for their fully franked dividends.

But having a large exposure to the banks and Australian property could be dangerous to your wealth. Any economic downturn could see banks share prices fall and property prices slide. And the longer we go without a recession, the more likely one looms up ahead.

So far it’s been 23 years without a recession in Australia. It’s only a matter of time before the next one.

With those thoughts in mind, it’s time to turn our attention to those blue-chip stocks that pay dividends equal to or even higher than the banks.

Here are our four ASX-listed dividend champions…

Financial services giant Suncorp Group Ltd (ASX: SUN) is currently paying a 7.1% fully franked dividend, but also rewarded shareholders with an additional 30 cent special dividend. Should the company be able to turn around its struggling life insurance business, more special dividends could be on the cards.

Another insurer, Insurance Australia Group Limited (ASX: IAG) pays a 6% fully franked dividend yield. Potential for strong earnings growth in the years ahead come from the company’s strong domestic market share as well as bedding down recent acquisitions, including Wesfarmers Ltd (ASX: WES) insurance underwriting business.

Telstra Corporation Ltd (ASX: TLS) raised its full year dividend to 29.5 cents, fully franked, and announced a $1 billion buy back to boot. Currently paying a yield of 5.3%, Telstra also showed it can deliver strong growth, with net profit rising 14% to $4.3 billion. Who said the telco couldn’t generate much growth?

Coca-Cola Amatil Ltd (ASX: CCL) is expected to pay a 75% franked dividend yield of 4.8% for the 2014 financial year, but the kicker is the soft drink bottler’s share price is 38% below its all-time high of $15.43. Investors have clearly fallen out of love with the company, making it a perfect time to pick shares on the cheap.

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