Because of the dominance of mining and banking shares, ASX investors are fortunate to have many attractive dividend shares to choose from.
And of course, dividends are a handy way to extract passive income out of your portfolio, so you can put your feet up and relax.
Australians are also lucky enough to have favourable tax rules for receiving distributions, namely via franking credits.
These allow investors to reduce or eliminate the amount of income tax paid on the passive income, as company tax has already been paid on that money.
Considering all this, let's check out three alluring dividend stocks on the market at the moment:
Everyone needs energy
With a war in Europe and another in the Middle East raging, energy security is just as big a headache for everyone in the world as it was last year.
Unfortunately, it looks like fossil fuels like coal will have to play a major role in meeting the global thirst for energy for a while yet, as green generators will take years to develop, build and come online.
Plus the huge growth in the middle class populations of giant nations like China, India and Brazil will demand more energy for a higher standard of living.
This is where a company like Whitehaven Coal Ltd (ASX: WHC) comes in.
The share price has sunk more than 24% over the past year, but Shaw and Partners portfolio manager James Gerrish and his Market Matters team was bullish on Whitehaven just a couple of weeks ago.
"Whitehaven Coal Ltd is trading on a PE of ~8x while being forecast to yield north of 6%," he said at the time.
"We continue to like Whitehaven Coal for growth."
And the best thing for passive income hunters?
Whitehaven shares pay out a dividend yield of 10.3% fully franked.
Has this finance stock passed the bottom?
For an even higher yield, one could look at something like Magellan Financial Group Ltd (ASX: MFG).
The share price has admittedly plunged 83% off its July 2021 peak, due to well publicised governance and performance issues in the business.
But that's pushed up the dividend yield to a stunning 13.9%, which is 85% franked.
Of course, one must always be careful with such high yields, as it could mean the business is declining and capital losses could occur.
More than one expert these days, though, thinks Magellan has been punished enough.
Magellan shares have rocketed more than 39% since late October to hover in the mid $8s now, igniting hope for those courageous enough to give this stock a go.
"We can see Magellan testing $10 into 2024," said Gerrish last week.
"Washington H Soul Pattinson and Company Ltd (ASX: SOL) bid for Perpetual Ltd (ASX: PPT) re-ignited interest in the ASX fund managers, with Perpetual up +6.7% and Magellan +4.7% on Thursday."
Maybe a group of dividend shares is what you need
If a coal miner and a rebuilding funds management business don't sit quite right with you, perhaps you might find a basket of dividend shares more comfortable?
Vanguard Australian Shares High Yield Etf (ASX: VHY) is an exchange-traded fund (ETF) that tracks the FTSE Australia High Dividend Yield Index.
Unlike some of its rival ETFs, it doesn't try to boost its distributions using call options or leverage, so the yield sits at a reasonable-but-not-massive 5.6%.
But this sacrifice in passive income is a trade-off for perhaps more stability with a diversified group of dividend shares.
