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Which blue-chip stocks have the best dividend yields?

The moniker of ‘blue-chip’ can have different meanings to different people, however it is commonly considered to be reserved for stocks with market capitalisations of several billion dollars. These same companies are nearly always market leaders in their particular industry.

For this screening process I limited the field of candidates to the 100 Leading Industrial stocks housed within the ALL ORDINARIES Index (Index: ^AXAO) (ASX: XAO). Next I removed any stocks that only pay partially franked or unfranked dividends.

Then as it is important to consider the future yield that our portfolio can provide us with – not what it has provided in the past – I used analyst consensus estimates (from Morningstar) for the current financial year (FY) 2015 to forecast the expected dividend yield. As a general rule of thumb, analysts are pretty accurate when it comes to forecasting current year earnings and dividends.

Here are five of the top yielding stocks:

  1. Seven Group Holdings Ltd (ASX: SVW): share price $5.21, forecast dividend 40 cents per share (cps), yield 7.7% fully franked (FF)
  2. Metcash Limited (ASX: MTS): share price $1.76, forecast dividend 13.2 cps, yield 7.4% FF
  3. National Australia Bank Ltd. (ASX: NAB): share price $31.95, forecast dividend 208 cps, yield 6.5% FF
  4. Insurance Australia Group Ltd (ASX: IAG): share price $6.25, forecast dividend 38.1 cps, yield 6.1% FF
  5. Australia and New Zealand Banking Group (ASX: ANZ): share price $31.00, forecast dividend 188.4 cps, yield 6.1% FF

Perhaps not surprisingly, two of the banks feature amongst the highest ‘blue-chip’ income stocks. Of more surprise to many readers will be that Telstra Corporation Ltd (ASX: TLS) is much further down the list with a forecast yield of just 5.3%.

Interestingly, unloved and out-of-favour companies Seven and Metcash, which are both trading at 52-week lows, are still expected to pay dividends which place them amongst the highest-yielding stocks available.

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Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.

 

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