The MarketIndex site compiles broker recommendations to get a consensus about the best of the biggest 150 shares on the ASX.
Relying on just one broker’s opinion may not give a lot of confidence, but if several brokers like a share then that’s a sign it could be a good idea.
When limiting the share ideas to only ones that have a yield above 5%, there are two shares that are rated as strong buys by the broker consensus:
IOOF Holdings Limited (ASX: IFL)
IOOF is one of Australia’s largest financial service companies, it offers a broad range of products including financial advice, superannuation, investment management and trustee services.
The financial company is coming out of the royal commission rather well with its other major competitors like AMP Limited (ASX: AMP) being criticised for a variety of issues. There is also speculation that the big banks like Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB) could leave the financial planning sector.
In its half-year result it revealed ‘underlying’ net profit after tax growth of 19% and dividend growth of 4%.
It’s currently trading at 15x FY19’s estimated earnings with a grossed-up dividend yield of 8.03%.
Sydney Airport Holdings Ltd (ASX: SYD)
This is the company that operates Sydney Airport. It is experiencing a big increase in international passengers each year, indeed each month, particularly from Asia.
Sydney is a global city, it’s attracting more tourists and residents every year. This is leading to more passenger fees, bigger retail rents and more car parking fees.
In the 2017 year Sydney Airport revealed revenue growth of 8.7%, net operating receipts per security grew by 15.9% and the distribution per security increased by 11.3%.
If passenger numbers continue to grow for Sydney Airport then it’s hard to see where the operating side of the business can go wrong. However, interest rates rising could be a big challenge in the near-future.
Sydney Airport is currently trading at 34x FY19’s estimated earnings with an unfranked yield of 5.28%.
I can see why both companies are popular choices with brokers. However, the Sydney Airport share price is very susceptible to interest rate movements whilst IOOF could suffer more than most in an economic downturn. Both are good businesses, but I wouldn’t want to buy them for my dividend portfolio at the current prices.
Instead, I’d much rather have this top growth stock in my portfolio which is growing its dividend even faster than Sydney Airport’s.
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.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Sydney Airport Holdings Limited. The Motley Fool Australia owns shares of National Australia Bank Limited. 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.