4 top income stocks for 2018

Australia’s Big Four banks and general insurers are at the top of many income investors’ lists and for good reason, paying fully-franked dividend yields over 5%. Those companies are already well known for their large, tax-effective distributions, so below I’ve highlighted four other stocks that I believe will reward income investors in 2018.

Macquarie Group Ltd’s (ASX: MQG) dividend has grown strongly over the last five years, with a compound annual growth rate of 21%. The investment firm currently yields around 5%, though this is somewhat dampened by the fact it is only partially franked as significant group earnings are generated overseas. Macquarie is expecting to increase profits in FY2018 and this should mean higher distributions to investors.

Woolworths Group Ltd (ASX: WOW) may be a surprise inclusion on this list, given the consumer staples giant’s fully-franked yield of just 3%. I’m expecting higher dividends to come in 2018, as the company recovers from the Masters debacle and regains its foothold in the supermarket business.

Woolworths increased its dividend by 9% to $0.84 in 2017, but this amount is still well shy of the $1.39 that was distributed in 2015. A stronger focus on core business activities has improved recent performance and outlook, as the company seeks to sell its national petrol station network to BP.

The ACCC recently announced it intended to block the $1.8 billion sale, and while disappointed by the decision, both firms appear committed to getting a deal done. That may require divestment of certain stations to appease the regulator, perhaps to other operators like Caltex with whom Woolworths currently has a relationship. Proceeds from the eventual sale of the petrol business could be used to improve existing supermarket fit-outs, shore up the balance sheet and increase the dividend.

WAM Capital Limited (ASX: WAM) has increased its dividend every year for the last five years and now yields more than 6%, fully-franked. WAM Capital is the flagship listed investment company (LIC) from Wilson Asset Management with an investment focus on small to medium sized ASX-listed companies. Since inception in 1999, WAM Capital has outperformed its benchmark ALL ORDINARIES (Index: ^AXAO) (ASX: XAO) index by an average 9.4% per annum.

Platinum Capital Limited (ASX: PMC) is another LIC which pays a healthy dividend, this time from Platinum Asset Management Limited (ASX: PTM) and with an investment objective to gain exposure to businesses from overseas markets. This LIC has a current yield of almost 5%, fully-franked, and has achieved a total average return of 12.8% per annum to shareholders since 1994.

OUR #1 dividend pick to grow your wealth over the new financial year is revealed for FREE here!

Financial year 2018 is here and The Motley Fool’s dividend detective Andrew Page has revealed his must buy dividend share to grow your wealth in 2018.

You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.

Motley Fool contributor Ian Crane owns shares in Woolworths Group Ltd. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.