Top 10 ASX dividend stocks to watch in April 2024

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Top 10 ASX dividend stocks to watch in April 2024

What Exactly Are Dividend Stocks, Anyway?

You’re investing in a company, right? Instead of just sitting back and hoping the stock price shoots up, imagine getting a little thank you note from the company in the form of cash or more shares. That’s the magic of dividend stocks. These companies share a slice of their profit with you, their shareholder, regularly. It’s a pat on the back for your faith in them. And that rate at which they pay you – the dividend yield – is a solid clue about how well the company’s doing.

It’s a sweet deal because you get a steady flow of cash, plus there’s always that chance your shares will be worth more over time. The companies dishing out dividends are usually the ones that have been around for some time. They’re known for pulling in consistent profits, making them a go-to for folks who are in the market for a steady income.

Why invest in ASX Dividend Stocks?

So, why should we consider putting our cash into dividend stocks on the Australian Securities Exchange (ASX)?

Well, for starters, the dividend yields are pretty handsome, especially when you stack them up against what’s on offer globally. A big shoutout to the franking credits system here, which is letting investors dodge double taxation on dividends. This makes these dividends even more lucrative for those calling Australia home. Plus, companies on the ASX are usually the stable, been-there-done-that types, making their dividends as reliable as your favorite pair of sneakers.

For anyone looking to build up an income-generating portfolio, these stocks are a good investment plan.

Weighing the Pros and Cons

Diving into the best ASX dividend stocks is not all sunshine and rainbows, though. On the bright side, they’re a steady income source and come with those nifty tax perks thanks to franking credits. This is awesome for investors hungry for regular returns. And since these dividends often come from companies that are financially solid, it feels a bit like betting on a sure thing. But here’s the catch: if you’re all in on dividend stocks, your portfolio might end up looking a bit same-same, heavy on sectors like banking and mining. Plus, in a market that’s growing fast, these stocks might not skyrocket in value as much as others because, hey, they’re sharing profits with you instead of reinvesting all of it back into the company.

Before You Jump In…

If you’re thinking about getting your feet wet with ASX dividend stocks, there’s a bit of homework to do first. You gotta check if the company can keep those dividends coming. Look at things like how much of their profit they’re giving back to shareholders – if it’s too high, it might not be sustainable. The tax, especially those franking credits, is super important to get your head around too, so you can pocket as much of those dividends as possible.

Then there’s the big picture – does investing in this company fit with your overall game plan? Mixing things up with different sectors and balancing between stocks that pay well and those poised for growth can help you strike the right balance between raking in income now and banking on more money down the road.

So, there you have it. Investing in dividend stocks, especially down under on the ASX, can be a good move. Just make sure you’re picking stocks that don’t just look good now but are also set to deliver in the long haul. And for that, here are the best ASX growth stocks that we think will be a right fit for your portfolio and which will help you generate steady dividends.

10 Best Dividend Stocks ASX Has to offer

BHP Group

Let’s talk about BHP Group and its knack for making shareholders smile with dividend checks. Last year, investors holding BHP shares got a sweet deal with dividends totaling $2.35 per share. This was split into two parts: a final dividend of $1.251 and an interim of $1.096. With the share price lounging around $45.05, this setup spells out a pretty tempting fully franked trailing yield of about 5.2%.

BHP stands out not just for the attractive income it offers but also for those lovely tax perks via franking credits. Even as the iron ore sector hinges on a tightrope of market volatility, BHP’s steady dividend flow is a testament to its solid footing and dedication to keeping shareholders in the loop with returns. For anyone eyeing a stock that promises both stability and generosity, BHP’s your ticket.

Yancoal

Now, if you’re all about high dividend yields, Yancoal Australia is like finding a diamond in the rough. This champ in the coal mining arena has a portfolio that’s as diverse as it is robust, covering both metallurgical and thermal coal. Despite the volatile coal prices, Yancoal’s not sweating it. Last year, they boasted revenues of $7.8 billion and kept their cash reserves plush at $1.4 billion. Shareholders? They were treated to dividends of 69.5 cents per share, all fully franked, thank you very much. With shares priced at $5.5, that’s a jaw-dropping trailing yield of 13%. Thanks to Yancoal’s savvy production boosts and solid financial health, investors hungry for hefty passive income streams might want to give Yancoal a closer look.

Commonwealth Bank of Australia

When it comes to banking on dividends, the Commonwealth Bank of Australia is like the dependable old friend who always comes through. CBA recently upped its interim dividend to $2.15 per share, a nice bump from last year and a move that reflects its pledge to enrich shareholders. This increase nudges the dividend payout ratio to 72% of its cash net profit after tax, neatly within its target range of 70% to 80%. Looking ahead, forecasts are singing tunes of $4.55 per share in dividends for the next couple of years, pointing to a forward grossed-up yield of 5.4%. And there’s chatter about a climb to $4.61 per share soon after, which would sweeten the yield to 5.5%. With a rock-solid balance sheet and a strategic dividend reinvestment plan in its arsenal, CBA is casting a wide net for investors in pursuit of steady, dependable dividend income.

BSP Financial Group

BSP Financial Group, hitting the spotlight as Papua New Guinea’s banking titan, really puts the ‘dividend’ in dividend stocks. With a hefty market cap of around $3 billion, this bank is throwing a party with a gross dividend yield that was 9.75% last financial year. And guess what? It’s getting wilder since then. The stock has leaped by 22% from the early days of last year. For anyone on the hunt for that rare combo of juicy returns and a steady ship, BSP Financial is flashing like a neon.

Rio TInto

Moving over to the big guns, Rio Tinto stands tall with its chest of essential minerals like iron ore, copper, and the battery favorite, lithium. With Goldman Sachs slapping a ‘buy’ on it and eyeing a price target of $140.20, there’s a sweet 13% potential uplift from its current stance at about $125.36. And for the dividend hunters, the forecast is looking lush with fully franked dividends expected to hit US$4.38 (A$6.66) for FY 2024 and nudge up to US$4.63 (A$7.04) for FY 2025. That puts the yield at a very attractive 5.5% and 5.8%, respectively. Thanks to its expected uptick in production, especially from the Oyu Tolgoi copper haven, and a sunny forecast for its main commodities, Rio Tinto is shaping up to be a sturdy bridge between solid income and growth.

Helia Group

Then there’s Helia Group, strutting its stuff on the ASX with a flair for both high growth and high yields. This insurance and mortgage giant, specializing in lenders’ mortgage insurance, is flexing with a 32% boost in its underlying net profit after tax for the half-year that wrapped up last June. The applause doesn’t stop there. Helia is boasting a gross dividend yield of 16%, alongside a staggering 25% return over the past year. For investors who like their dividends large and their stock performance larger, Helia Group is yelling, “Look no further!” With such a solid track record in both profitability and rewarding shareholders, it’s like finding a goldmine of passive income.

Woodside Energy

Woodside Energy isn’t just playing in the energy league; it’s aiming for MVP when it comes to dividends. Even in a year when oil and gas prices decided to play hardball, Woodside kept its cool, delivering a solid final dividend of 91.7 cents per share. Add this to an earlier interim dividend of $1.243, and you’re looking at a handsome fully franked trailing yield of 7.1%. But it gets more interesting with oil prices getting a second wind and production forecasts looking bright for the next year, Woodside’s future in the dividend game looks pretty promising.

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New Hope

New Hope Corp is a a top-tier coal share on the ASX 200. With a recent payout that’s as attractive as they come: a final fully franked dividend of 30 cents plus an interim of 17 cents per share. At the current price, we’re talking about a fully franked yield that’s through the roof at 8%. And when the big guns at the company are putting their own cash into shares, you know there’s something good brewing. Morgans is even talking about dividends hitting 35 cents and 34 cents over the next couple of years, which could mean yields of 8% and 7.8%, respectively. With that kind of insider buying and forward-looking income potential, New Hope is painting itself as the high-yield stock.

National Australia Bank

National Australia Bank, or NAB as we know it, with a recent uptick in dividends has got everyone talking—a 7.7% jump to 84 cents per share for the final FY23 payout, and an even more impressive 13.7% increase to 83 cents for the half-year—NAB is all about giving back to its shareholders. This generosity is pointing towards a grossed-up yield of roughly 7% on the horizon, thanks to anticipated annual dividends climbing to $1.68 per share. And while the share price has been on the up, making yields a tad tighter, NAB’s earnings forecasts and its competitive edge, especially when you size it up against peers, underscore its allure for those of us after a mix of steady income and long-term reliability in our dividend pursuits.

Wrapping Up…

It’s clear that there’s a lot on the table for those of us keen on beefing up our income streams while keeping an eye on growth.

But, as with all good things, there’s a bit of homework involved. Making sure those dividends aren’t just a flash in the pan involves a deep study of the companies’ financial, understanding the sectors they play in, and assessing how they fit within the broader market. The trick is to strike a harmonious balance—finding those gems that not only send regular checks your way but are also positioned for growth down the line.

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