Up to $1.4 trillion worth of dividends are tipped to hit investors' bank accounts next year, and Australian investors are in the box-seat position to benefit.
As reported by The Australian Financial Review, the latest quarterly Henderson Global Dividend Index (HGDI) predicted that US$1.19 trillion in dividends ($1.36 trillion) will be paid out by corporations around the globe in 2014, while that figure is set to balloon out to a massive US$1.24 trillion in 2015, equating to roughly $1.4 trillion in AUD terms.
This is extremely good news for Aussie investors. Due to the more restricted growth prospects in our smaller market (compared to other markets such as the U.S. or Europe), Aussie companies tend to payout far more of their profits to shareholders in the form of dividends. With franking credits (an enormous tax benefit) often attached, this makes Australian dividends all the more appealing.
In fact, of the world's top 20 dividend-paying stocks in the September quarter, four were Australian – a remarkable feat considering the smaller size of our market. These companies included Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ), BHP Billiton Limited (ASX: BHP) and Telstra Corporation Ltd (ASX: TLS).
The Best Dividend-Paying Stocks in Australia
Although each of the companies mentioned above offer attractive yields, none of them are particularly appealing today, for various reasons. For instance, the banks and Telstra appear to be very expensive while BHP Billiton is being weighed down by tumbling iron ore prices.
Yet with interest rates tipped to stay low for the foreseeable future, high-yield dividend stocks are as appealing now as they've ever been!
Instead of potentially overpaying for some of Australia's most popular dividend stocks, investors should take a look at companies like Coca-Cola Amatil Ltd (ASX: CCL) and RCG Corporation Limited (ASX: RCG). Coca-Cola Amatil's shares are trading near their lowest price in six years and offer a forecast 4.5% yield, franked to 75%.
RCG Corporation, the owner of The Athlete's Foot shoe store chain, also offers plenty of growth and is forecast to pay 4.7 cents per share (fully franked), giving it a massive grossed up yield of 10%!
Indeed, not every company that offers an attractive dividend yield is going to be a good bet. Investors also need to ensure they can sustain those payments and assess whether the company can continue growing earnings in the future – something I believe both Coca-Cola Amatil and RCG Corporation are more than capable of.
