Following positive U.S. Federal Reserve comments overnight, the S&P/ASX200 (Index: ^AXJO) (ASX: XJO) is once again charging towards 6,000 points, with big dividend stocks leading the pack.
Unsurprisingly – with RBA interest rates at just 2.25% – it's the well-known blue chips showing the best gains.
But it's not just the big banks and supermarkets which are currently trading on significant dividend yields.
Here are 10 blue-chip dividend stocks yielding over 5%, which you can add to your watchlist…
| Stock | Dividend Yield | Full franking credits? |
| Woodside Petroleum Limited (ASX: WPL) | 6.53% | Yes |
| Insurance Australia Group Ltd (ASX: IAG) | 6.25% | Yes |
| Suncorp Group Ltd (ASX: SUN) | 6.15% | Yes |
| AusNet Services (ASX: AST) | 6.06% | Partially franked |
| Spark Infrastructure Group (ASX: SKI) | 5.47% | No |
| Scentre Group Ltd (ASX: SCG) | 5.45% | No |
| National Australia Bank Ltd (ASX: NAB) | 5.29% | Yes |
| Orica Limited (ASX: ORI) | 5.27% | Partially franked |
| Sky Network Television Ltd (ASX: SKT) | 5.26% | No |
| Australia & New Zealand Banking Group (ASX: ANZ) | 5.08% | Yes |
Source(s): Morningstar & ASX.com.au.
The importance of franking credits
As can be seen from the above table, not all dividends are created equal. If a company intends to pay fully franked dividends investors will receive a tax benefit. If a dividend is fully franked, simply divide the payout by 0.7 to get its 'grossed-up' yield. The calculation for a partially franked dividend is slightly more complicated.
National Australia Bank's fully franked 5.29% dividend, for example, becomes 7.55% when adjusted for its full franking credits (i.e. 5.29/0.7).
Whilst shareholders won't receive the benefits of franking credits until tax time, investors should pay close attention to a company's ability to distribute them in the future, when picking their dividend stocks.
Should you buy these 10 dividend stocks?
All of the above companies should be on your watchlist. However, at today's prices, I think the three that deserve further research and consideration are Scentre Group, AusNet Services and Sky Network TV.
