There are many reasons Australians love to invest in the local share market.
But perhaps the best reason of all is dividends.
Big payout ratios and dividend yields make our share market one of the best for income-hungry investors. Particularly if you have a view to the long term.
Identifying companies with fully franked dividends, which produce a 30% store credit at the ATO against your tax file number, are a great way for passive share market investors to generate an income from their investments. As well as the potential for capital gains over the long term.
And since official interest rates (currently 2.5%) are being tipped by some to go lower in 2015, there's even more reason to get some exposure to the share market.
With that in mind, here are five top dividend stocks – included in the S&P/ASX 200 (ASX: XJO) (INDEX: ^AXJO) – you should add to your watchlist in 2015.
1. Telstra Corporation Ltd (ASX: TLS) is perhaps the most renowned dividend stock on the ASX. Its dividend payments have become extremely reliable over the last five years as the company shored up its financial position and focused on its growing high margin businesses. In the company year, it is expected to pay a 30 cents per share fully franked dividend, which is equivalent to a 5% yield (7.1% grossed-up).
2. Macquarie Group Ltd (ASX: MQG) isn't your typical dividend stock because its earnings base can rise or fall dramatically with global markets. However, although it does have significant exposure to capital markets, our biggest investment bank is growing its annuity style businesses whilst also maintaining a conservative balance sheet. It is currently trading on a 5.1% partially franked, or 6% grossed-up, dividend yield.
3. Village Roadshow Ltd (ASX: VRL) has endured a tough 2014, with its share price dropping 21%. However now could be a prime buying opportunity for savvy long-term investors, with key movie releases scheduled in the coming year, and ongoing benefits from its new Wet'n'Wild theme park opening in Sydney. It is offering a 4.7% fully franked dividend yield (6.7% grossed-up) in 2015.
4. Australia and New Zealand Banking Group (ASX: ANZ) is our third biggest bank by market capitalisation but has the greatest exposure to booming Asian markets. Although its shares don't come cheap, its long-term future looks promising. It is forecast to pay a 5.9% fully franked dividend (8.4% grossed-up).
5. Credit Corp Group Limited (ASX: CCP) is our largest receivables management (aka debt collections) company. In addition to the group recently upgrading its debt ledger forecasts for the year ahead, it is undertaking an expansion into the US and growing its small loan offering. At today's prices it offers a 4.2% fully franked dividend (5.9% grossed-up).
