Investing for one's superannuation fund arguably requires a slightly different lens compared to buying ASX shares outside super. Most Australians want companies that offer strong, stable cash flows in their super funds, and that preferably pay out consistent, fully franked dividends. But which ASX dividend stocks to pick?
That's what we'll be diving into today. So without further ado, here are ten ASX dividend stocks that I would buy if I were filling out a self-managed superannuation fund (SMSF) right now, and why.
10 ASX dividend stocks I would pick for a superannuation fund today
To kick things off, I would start with Commonwealth Bank of Australia (ASX: CBA). Now, yes, I do regard the CBA share price as significantly overvalued right now. Saying that, CBA undoubtedly remains the best-run bank in the country, and a pillar of the Australian financial landscape. Since we are talking about superannuation and have a decades-long timeline, I would hold my nose and add CBA to my super fund today.
I would also add another ASX 200 bank stock to the mix with National Australia Bank Ltd (ASX: NAB). I like the business strengths that NAB offers, as well as its far cheaper price tag (and higher dividend yield) it comes with today, compared with CBA anyway. Like CBA and most of the other banks, NAB has a habit of paying out fat, and fully franked, dividends.
Wesfarmers Ltd (ASX: WES) is another ASX dividend stock I wouldn't look over. It offers the gold-standard retailers like Officeworks and Bunnings, but also a diversified portfolio of other businesses. These range from lithium companies to chemical and fertiliser manufacturing. Wesfarmers also has a long history as a strong dividend payer.
Coles Group Ltd (ASX: COL) used to be part of Wesfarmers but was spun out in 2018. Since then, it has gone from strength to strength. As a leading supplier of food, drinks, and life essentials, Coles offers fat, fully franked dividends and a resilient earnings base. What more could one want from an ASX dividend stock and superannuation share?
Phones and mines
Telstra Group Ltd (ASX: TLS) is another ASX dividend stock that can't be ignored for a superfund. As the leading provider of telecommunication services in Australia, Telstra has a lot to offer investors seeking predictable cash flows. It's been a reliable source of dividend income for decades and continues to be the first choice for mobile and internet amongst most of the Australian public.
Next up, we have BHP Group Ltd (ASX: BHP). Normally, I wouldn't opt for commodity shares for a super fund, given the highly cyclical nature of the sector. However, given its diversified nature and inherent quality, I would make an exception for BHP. As one of the largest, lowest-cost mining companies in the world, BHP has the potential to shower its shareholders with dividend income when commodity prices are high. I like how this ASX dividend stock has its operations spread out across different materials too, such as iron ore, nickel, potash, and copper.
Given how important these commodities remain to the global economy, BHP is a great long-term bet for a super fund.
Roads, lottery tickets, and a top ASX dividend stock
Transurban Group (ASX: TCL) is a bit of an outlier on this list as it doesn't offer its investors franking credits. Even so, this toll road operator and ASX dividend stock has a lot to offer a superannuation fund. This company counts some of the country's most important arterial roads and highways within its portfolio. Most of these tolls are permitted to rise by at least the rate of inflation each year, making Transurban's future cash flows (and dividends) highly predictable.
Now we come to one of my personal favourites when it comes to ASX dividend stocks. Washington H. Soul Pattinson and Co Ltd (ASX: SOL) is dividend royalty, being the only share to have increased its annual dividend for more than 25 years in a row. Soul Patts also offers a highly diversified underlying portfolio of assets, and is a perfect stock for a superannuation fund. If I had to choose just one stock on this list for my own SMSF, this would be it.
We can say the same for Lottery Corp Ltd (ASX: TLC). Lottery Corp has exclusive licenses to run lottery and Keno games in most Australian states and territories. Given the enduring popularity of these games, I think this ASX dividend stock is a great company to own for decades, and makes for a great candidate for any income-focused portfolio.
A final ASX dividend… ETF
Our final stock is not really a stock at all, but an exchange-traded fund (ETF). The Vanguard Australian Shares High Yield ETF (ASX: VHY) holds a portfolio of around 50 of the ASX's best dividend shares, including most of the stocks we've already discussed today. Seeing as this portfolio is regularly rebalanced, investors can simply buy it and put it in the proverbial bottom drawer.
