5 shares with over 5% dividend yields for income-seeking investors

Credit: Telstra

After a torrid month of trading on the ASX, the start of calendar year 2016 will undoubtedly have unsettled quite a few investors.

There is always a silver lining that comes from volatility and lower prices however – your universe of investment opportunities expands!

While volatility is indeed caused by investors adjusting their expectations and it’s reasonable that new information can lead to new valuations; rather than being dismayed by volatility, long-term investors should welcome the opportunity that lower prices create.

For long-term investors wishing to add high-yielding dividend stocks to their portfolio, recent price falls may have increased the appeal of a number of blue-chip stocks based on analyst consensus data for financial year 2016 dividend distributions.

Here are five companies that could be worth considering:

  1. Telstra Corporation Ltd (ASX: TLS): fully franked dividend yield of 5.7%
  2. Commonwealth Bank of Australia (ASX: CBA): fully franked dividend yield of 5.5%
  3. Suncorp Group Ltd (ASX: SUN): fully franked dividend yield of 7.1%
  4. Aurizon Holdings Ltd (ASX: AZJ): partially franked dividend yield of 6.8%
  5. AMP Limited (ASX: AMP): partially franked dividend yield of 6%

Make sure the dividend is maintainable

Perhaps the single-most important factor income-seeking investors need to focus on is the sustainability of a stock’s yield.

For example, while BHP Billiton Limited (ASX: BHP) has a trailing yield of almost 11%, its forecast yield is much lower at 6.1% and given the decline in commodity prices there would appear to be risks to the downside on this forecast yield.

In contrast, investors can hold a very-high level conviction in Telstra’s ability to meet market expectations for a 31.5 cent dividend in 2016 and arguably a similar level of conviction could be held for the other four stocks identified above.

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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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