Buying stocks with a high dividend payout can be risky, as there is a chance the company is foregoing investing in growth in favour of returns to shareholders.
But if you can find a company that can maintain a solid dividend payout, it can be a great addition to a portfolio.
The two companies I'm looking at today don't pay franked dividends, which means you'll pay your marginal tax rate on their contribution to your income, so that's something to consider before investing.
Let's have a look at the companies I've selected.
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Arena REIT (ASX: ARF)
Arena has had a turbulent year, with one of its major tenants, Edge Early Learning Centres, being placed in administration in August.
This was potentially serious for Arena, which owned 27 centres where Edge was a tenant.
In late August, the company announced guidance of at least 18 cents per share in dividends for FY27, assuming it would earn no income at all from the Edge centres for the rest of the financial year.
Arena has since had good news on the Edge front, with Goodstart Early Learning taking over a large number of Edge businesses operating from its sites, and several smaller operators taking over other sites.
As a result, Arena on 3 November upgraded its distribution guidance to 20 cents per share, a 3.9% increase over the previous year.
Calculated using the $2.71 share price at the time of writing, this equates to a dividend yield of 7.4%.
Chorus Ltd (ASX: CNU)
Shares in this New Zealand-focused telco are trading not far off their 12-month lows, and a recent connections update on 30 October did nothing to change this.
The company said its fixed line connections had increased "slightly" over the September quarter, up 1,000 to 1.192 million, while net fibre connections of 5,000 were partly offset by 4,000 copper disconnections.
Broker Macquarie had a look at the connections report and said in a new research note that Chorus had a stable connection base, "and sustainable, CPI-plus dividend growth''.
The broker added:
While fibre growth moderated from 2H26, total connections have now increased in two of the past three quarters, reinforcing our view that the long-running drag from copper migration is approaching an inflection.
Macquarie said a stabilising connection base, diminishing copper drag and greater regulatory certainty had strengthened Chorus's earnings visibility.
The broker is forecasting a dividend yield of 7.6% this year, growing to 8.1% by FY29.
Chorus shares were trading at $6.45 at the time of writing, down 22.2% over the past 12 months.
