Recently, Bell Potter analyst Richard Coppleson compiled a list of the best 20 dividend payers on the ASX 200 in 2019.
I have selected 3 stocks from the list which might be worth looking at.
Commonwealth Bank of Australia (ASX: CBA)
Commonwealth Bank tops the list, paying out over $4 billion to investors in FY 2019, a 0.6% improvement from the previous year. As Australia’s largest bank, CommBank pays a dividend of $4.31 per share, with an annual dividend yield over 5%, making it a favourite among income investors. Last month Commonwealth Bank reported an 8% fall in full-year profits as a result of a slowing economy, falling interest rates and compensation costs. Despite the fall in profit, CommBank maintained its dividend payout highlighting the company’s dominance of the financial sector.
BHP Group Ltd (ASX: BHP)
BHP was second on the list, paying more than $3 billion in dividends to investors in 2019. The company smashed its previous full-year dividend record of $US1.24 per share by paying US$3.34 per share. BHP paid a fully-franked interim, special and final dividend in 2019, resulting in a 23.2% improvement in payout from the previous year. BHP’s record return follows the meteoric rise in the spot iron ore price early this year. Recently analysts from Goldman Sachs upgraded the mining giant to a buy with a $41.90 price target. Analysts from Goldman cited an expected boost in production from BHP’s oil production projects and expect iron ore prices to stay higher for longer.
Coles Group Ltd (ASX: COL)
Despite only coming in 12th on the overall amount paid, Coles presents a great outlook among income investors. Coles has a favourable dividend policy with the company paying out 80-90% of its earnings to shareholders. The high demand for Coles is reflected in the company’s share price which is currently trading near 52-week-highs. Coles paid a fully franked dividend of 35.5 cents per share, comprised of a final dividend and a special dividend to cover the period from the company’s demerger with Wesfarmers Ltd (ASX: WES). Last month Coles posted a strong full-year report, with the company in the process of a four-year transformation program.
What should you buy?
In my opinion, income investors should develop a strategy that enables sustainable returns across everchanging market cycles. This means finding stocks in both defensive and cyclical sectors in order to add balance to your portfolio. In addition, it is important to pick companies with a resilient business model, sales and revenue growth, cash flow and a growing dividend.
Other companies with the biggest dividend payout of 2019 included;
Wesfarmers, Rio Tinto Ltd (ASX: RIO), Telstra Corporation Ltd (ASX: TLS), Fortescue Metals Group Limited (ASX: FMG), Woolworths Group Ltd (ASX: WOW), CSL Limited (ASX: CSL), Brambles Limited (ASX: BXB), Woodside Petroleum Ltd (ASX: WPL), ASX Limited (ASX: ASX), Insurance Australia Group Ltd (ASX: IAG), AGL Energy Limited (ASX: AGL), QBE Insurance Group Ltd (ASX: QBE), APA Group (ASX: APA), Goodman Group (ASX: GMG), Medibank Private Ltd (ASX: MPL) and Origin Energy Ltd (ASX: ORG).
If you would like to find more great dividend stocks, here are our top 3 dividend bets.
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Nikhil Gangaram has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended Telstra Limited and Wesfarmers Limited. The Motley Fool Australia owns shares of Insurance Australia Group 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.