The 10 ASX dividend shares delivering the highest yields

With term deposits paying little more than 1%, high-yielding stocks have the potential to provide regular income.

man laying on his couch with bundles of money and extremely ecstatic about high dividend returns

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ASX dividend shares are in the spotlight in today's ultra-low interest rate environment.

On Tuesday, the Reserve Bank of Australia (RBA) stuck to its guns, keeping the official cash rate at a historic, rock bottom 0.10%. That means we're unlikely to see higher returns from any cash held in savings deposits for some time yet.

Last I checked, even term deposits weren't paying much over 1%. Meaning once you factor in inflation, your $100 in the bank will actually buy you less next year than it will today.

It also means investors seeking regular income – and willing to take more risk with their money than sticking it in a bank – increasingly look to ASX dividend shares. They hope that these will not only return inflation-beating yields but will deliver some capital gains as well.

A few words of caution for yield investors

Before moving on to the 10 top-yielding ASX dividend shares, a few words of caution.

Not all high-yielding shares are created equal.

Sometimes a share will have a high trailing dividend yield because its share price has fallen dramatically. If that's the case you'd be wise to investigate why its shares have been falling and what the consensus outlook is moving forward.

Remember, there's no guarantee a company will continue its current dividend payout ratio. Especially if its share price has been under pressure. Best to focus on expected future yield than past yields.

Also, any money that ASX dividend shares return to shareholders is money the companies won't be able to reinvest into their business.

With that said, let's move on to…

The 10 top-yielding ASX dividend shares

Taking out the number 1 position (data from Iress as reported by The Australian) among the 50 largest ASX companies is Fortescue Metals Group Limited (ASX: FMG). Fortescue pays a 10.8% dividend yield, 100% franked. The mining giant has a market cap of $72.2 billion. The Fortescue share price is up 57% over the past 12 months.

Coming in at number 2 is AGL Energy Limited (ASX: AGL). AGL pays a 10.2% dividend yield, unfranked. The energy provider has a market cap of $5.4 billion. The AGL share price is down 50% over the past 12 months.

The third best yielding company making the list is Aurizon Holdings Ltd (ASX: AZJ).  Aurizon pays a dividend yield of 7.8%, 70% franked. The rail freight operator has a market cap of $6.8 billion. The Aurizon share price is down 24% over the past 12 months.

Number 4 is Origin Energy Ltd (ASX: ORG). Origin pays a dividend yield of 5.6%, unfranked. The energy provider has a market cap of $7.9 billion. The Origin share price is down 25% over the past 12 months.

The fifth best yielding company in the top 50 ASX shares is APA Group (ASX: APA). APA Group pays a 5.5% dividend yield, unfranked. The energy infrastructure company has a market cap of $11 billion. The APA Group share price is down 20% over the past 12 months.

Top-yielding ASX dividend share number 6 is DEXUS Property Group (ASX: DXS). Dexus pays a dividend yield of 5%, unfranked. The commercial property owner and manager has a market cap of $11.2 billion. The Dexus share price is up 10% over the past 12 months.

At number 7 we have Rio Tinto Limited (ASX: RIO). Rio pays a dividend yield of 4.9%, fully franked. The iron ore miner has a market cap of $47.2 billion. Over the past 12 months, the Rio Tinto share price is up 25%.

Number 8 is GPT Group (ASX: GPT). GPT pays a dividend yield of 4.9%, unfranked. The diversified property group has a market cap of $9.1 billion. The GPT Group share price has gained 12% over the past 12 months.

Stockland Corporation Ltd (ASX: SGP) takes the number 9 position. Stockland pays a 4.7% dividend yield, unfranked. The property owner and manager has a market cap of $11.5 billion. Stockland's share price is up 23% over the past 12 months.

Rounding out the list of the 10 top-yielding ASX dividend shares is Australia and New Zealand Banking Group Ltd (ASX: ANZ). ANZ pays a dividend yield of 4.6%, fully franked. The big 4 bank has a market cap of $81.9 billion. Over the past 12 months, the ANZ share price has gained 51%.

There you have it.

10 high yielding ASX dividend shares amongst the biggest 50 companies on the ASX. Six have seen their share price rise over the past full year while four have suffered share price falls.

Why the Motley Fool's Scott Phillips leans towards APA Group

Earlier today I reached out to Scott Phillips, the Motley Fool's CIO, to get his take on the list of top 10 ASX dividend shares.

He told me he'd steer clear of the retail energy shares. He also wouldn't buy Rio or Fortescue at their current prices.

As for the commercial property shares listed above, Scott said:

I'm keeping a watching brief on commercial property. With a lot changing in the world of retail, and many people now working from home, I'm not sure it's possible to have a good handle on future occupancy rates. If I was looking at REITs, even though I don't expect them to be market-beating, I'd go for bulky goods retail and/or warehousing.

Scott believes that Aurizon looks fascinating, saying the share "looks cheap, and its yield looks good". What investors need to be aware of, he added, is the question of "how long it can keep its coal cars full, and scale benefits flowing". At the moment he prefers to wait on the sidelines with this share.

Out of the top-yielding ASX dividend shares listed above, Scott picked APA Group as "a good option for a diversified income portfolio".

He said:

APA has a quality business of near-monopoly gas pipelines, and I think the demand is likely to be robust in the medium-long term.

I don't expect it to be market-beating from a total return perspective. But I think it's a useful part of a diversified income portfolio, especially as many income seekers are overweight banks and REITs.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended APA Group. The Motley Fool Australia has recommended Aurizon Holdings Limited. 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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