Following positive U.S. Federal Reserve comments at the weekend, the Australian dollar dropped and the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is once again charging back towards 6,000 points, with big dividend stocks leading the pack.
Unsurprisingly — with RBA interest rates at just 2.00% per year — it's the well-known blue chips showing the best gains, with the big banks and supermarkets each pushing higher.
But it's not just the big banks and supermarkets which are currently trading on significant dividend yields…
Here are seven blue-chip dividend stocks yielding over 5% which you can add to your watchlist…
| Stock | Forecast Dividend Yield | Full franking credits? |
| Suncorp Group Ltd (ASX: SUN) | 6.44% | Yes |
| Australia and New Zealand Banking Group (ASX: ANZ) | 5.69% | Yes |
| AusNet Services (ASX: AST) | 5.65% | Partially franked |
| Insurance Australia Group Ltd (ASX: IAG) | 5.64% | Yes |
| Scentre Group Ltd (ASX: SCG) | 5.33% | No |
| Sky Network Television Ltd (ASX: SKT) | 5.29% | No |
| Woodside Petroleum Limited (ASX: WPL) | 5.15% | 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, however, is slightly more complicated.
Australia and New Zealand Banking Group's fully franked 5.69% dividend, for example, becomes a massive 8.13% when adjusted for franking credits (i.e. 5.69/0.7).
Whilst shareholders won't receive the benefits of franking credits until tax time, among many other things, investors should pay close attention to a company's ability to distribute them in the future, when comparing dividend stocks.
Should you buy these 7 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.
