16% gross yield: The 3 hottest high-dividend ASX stocks to buy right now

Exclusive: Expert reckons a trio of shares are looking great for those seeking a strong flow of passive income.

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Headshot image of IG Australia market analyst Hebe Chen

Market analyst Hebe Chen. Image source: IG Australia

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Australia is blessed with many quality dividend stocks, with a bunch of shares on the ASX right now paying up more than 10% yield.

That's some pretty handy passive income.

However, investors do need to do their research and be careful about stock selection.

IG Australia market analyst Hebe Chen warned that a high dividend yield doesn't automatically make a stock a worthy investment.

"A 'yield trap' to avoid is parking your money in a stock that offers a seemingly attractive yield despite having weak financial fundamentals, which can erode the total value of your capital," Chen told The Motley Fool.

"When a company either increases its dividend beyond the norm or experiences a rapid decline in share price, it can create the illusion of a high yield."

Keeping this in mind, Chen named three dividend stocks on the ASX that she would be tempted to buy at the moment:

The geese laying golden dividends

Helia Group Ltd (ASX: HLI) is a finance company that provides lenders' mortgage insurance.

The business has been going well, with the half-year ending last June showing a 32% improvement in the underlying net profit after tax (NPAT).

And it shows in the stock performance.

"Helia offers a 16% gross dividend yield, while its stock prices have delivered a 72% one-year return and a remarkable 223% three-year return," said Chen.

Helia's 2023 full-year results will be revealed on 27 February.

Fortescue Ltd (ASX: FMG) has been making hay with the global iron ore price surprisingly buoyant over the past year.

"Fortescue offers an 8.91% gross dividend yield, with its stock prices recently reaching an all-time high," Chen said.

"FMG's share price [has] increased by 27% in the past 52 weeks and an astonishing 600% since 2019."

BSP Financial Group Ltd (ASX: BFL) is a name rarely discussed, but it is a $3 billion player on the ASX.

The business is, in fact, the largest bank in Papua New Guinea, and the dividend stock has been very rewarding to its investors in recent times.

"BSP Financial's gross dividend yield was 9.75% in the past financial year, with its stock price jumping 32% from early last year and 51% over the past two years."

Chen reminded investors that harvesting high dividends is "a balancing act". 

"For investors seeking sustainable passive income and a stress-free investment journey, it's crucial not only to check the dividend yield but also to consider the stock's past performance as the essential criteria."

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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