Should you buy shares in Aurizon Holdings Ltd for the dividend?

Photo: OzinOh Flickr

Railway operator Aurizon Holdings Ltd (ASX: AZJ) has seen its share price rise nearly 8% since the start of 2017 to currently trade around $5.45.

Over the same period, the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) has gained just 1.8%.

Aurizon mainly operates in Queensland, hauling coal from the mines in the west to the coast, as well as agricultural, industrial and retail products. The company also hauls iron ore from the Pilbara in Western Australia to several ports for export.

In the 2016 financial year (FY16) Aurizon generated reported earnings per share of 3.4 cents per share and paid a dividend of 24.6 cents per share – partly franked at 70%. Analysts expect the rail company to pay a similar dividend in the 2017 financial year (FY17).

At the current price that represents a dividend yield of 4.5%, but with it partly franked to 70% would mean there are better options out there like the stocks mentioned below.

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Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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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