Where I would reinvest my dividends this week

On Thursday morning shareholders of a number of blue chip shares including Brambles Limited (ASX: BXB), Cochlear Limited (ASX: COH), Qantas Airways Limited (ASX: QAN), Rio Tinto Limited (ASX: RIO) received their respective interim or final dividends into their nominated accounts.

While some of these shareholders will use these dividends as a source of income to live from, others will no doubt be looking to reinvest the funds back into the share market.

Here are three shares that I would be investing these funds into:

BHP Billiton Limited (ASX: BHP)

Investors that are interested in gaining exposure to the resources sector might want to consider mining giant BHP Billiton. I believe its shares are great value right now, especially given the favourable outlook for the key commodities that it produces. While a trade war could stunt global economic growth and lessen demand for commodities, I remain confident that a crisis will be averted. This should allow BHP Billiton to continue its fine form and deliver bumper profits for at least the next couple of years. Another bonus with BHP Billiton is that its shares offer investors a trailing fully franked 4.1% yield.

ResMed Inc. (CHESS) (ASX: RMD)

I think that this healthcare company which specialises in the treatment of sleep apnoea and other chronic respiratory diseases would be a great option for investors. Due to ResMed’s position as a leader in a market that is expected to grow meaningfully over the next decade, I think it is capable of continuing its strong earnings growth for some time to come. In the first half of FY 2018 ResMed grew its non-GAAP income by 39% on the prior corresponding period to US$143.8 million.

Telstra Corporation Ltd (ASX: TLS)

Investors that are in search of even more dividends might want to consider this telco giant’s shares. In early trade on Thursday Telstra’s shares have drifted to yet another multi-year low. While I’m not convinced that they have bottomed just yet due to the weak investor sentiment, I do think an investment at the current share price offers a compelling risk/reward. Telstra intends to pay a 22 cents per share dividend to shareholders in FY 2018 and FY 2019. This equates to a generous fully franked yield of over 7.1% at the current price.

While Telstra's dividend may not be expected to grow in the near term, these top dividend shares are growing theirs at strong rates.

Breaking news: ASX companies set to raise dividends!

It's been a nail-biter of a reporting season here in the first half of 2018.

But the real action, in my opinion, is what companies are doing with dividends.

What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia has recommended Cochlear Ltd. and ResMed Inc. 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 Scott Phillips.

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