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Dividend Stocks on ASX: Top 10 for Long Term [2022]

Investors are closely looking at their portfolios as inflation and changing economic conditions appear to be key risks going into FY23. One of the ways to generate returns in Australia is by looking for the top dividend stocks on ASX, fortunately there are plenty of them. Here are the top 10 long term dividend stocks on the ASX.

Key highlights:

  • Australian shares are expected to pay out $42.3b in FY22.
  • The top ASX dividend stocks are led by companies in the resources sector.
  • High dividend stocks on the ASX are usually determined by a company's financials.

What are the best dividend stocks for investors?

Well it's a complicated question, but the first thing to answer is what exactly are dividends. Dividends are cash payouts to investors funded by the company’s long-term cash flow and the profits they make each year. Most recently in FY22, ASX 200 shares announced dividends totalling $42.3 billion, down 1.7% year over year. The most common form of a dividend is a cash payment, but there are other ways a company can return profits to shareholders.

Dividend stock investors view a stock’s yield as the key measure of a stock’s value. It offers an insight into how great the return on an investment will be. Remember that past performance is no guarantee of future performance and you should consider your personal circumstances before investing. With that said, these are some of the top long term dividend stocks on the ASX.

Top dividend stocks on ASX

Company Name

Ticker Symbol

Stock Price

Year to Date

Market Capitalisation

Dividend Yield

BHP Group Limited

BHP

$39.92

5.80%

$202.98b

11.56%

Rio Tinto Limited

RIO

$96.90

-2.80%

$36.19b

9.94%

Telstra Corporation Limited

TLS

$3.83

-9.24%

$44.13b

3.52%

Macquarie Group Limited

MQG

$158.56

-24.97%

$61.63b

3.84%

New Hope Corporation Limited

NHC

$6.60

184.48%

$5.84b

6.23%

Whitehaven Coal Limited

WHC

$10.37

275.72%

$9.71b

5.70%

Suncorp Group Limited

SUN

$10.32

-10.26%

$13.02b

4.03%

Harvey Norman Holdings Ltd

HVN

$4.11

-18.45%

$5.27b

8.59%

Fortescue Metals Group Ltd

FMG

$17.24

-13.15%

$54.28b

18.42%

Commonwealth Bank of Australia

CBA

$94.00

-8.30%

$161.38b

4.03%

Data as of 11 October 2022

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Here are the top dividend stocks on the ASX

1. BHP Group Limited (BHP)

Market Capitalisation: $202.98b

Stock price (as of 11/10/2022): $39.92

Dividend yield: 12.16%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 78% / 22%

BHP is one of the best long term stocks to watch on the ASX. In 2022 it paid out a huge US$1.75 per share dividend, bringing the total payout for the year to US$3.25 per share. This brings its dividend yield for 2022 to 12.16%. In total, record dividends of US$36b have been determined for FY22.

It followed the company's full-year results where the company achieved double-digit growth across its key financial metrics. Broker house Goldman Sachs says it is likely though that the company will cut its dividend payouts in the future. Goldman anticipates a payout of US$2.64 FY23. The current high iron ore prices are not expected to last, says Goldman, which would see BHP's revenue decline.

If you're interested in the mining giant, learn how to buy BHP Group shares.

2. Rio Tinto Limited (RIO)

Market Capitalisation: $36.19b

Stock price (as of 11/10/2022): $96.90

Dividend yield: 10.39%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 72% / 28%

Global mining group Rio Tinto meanwhile slashed its payouts by 52% in its half yearly earnings. The slump in iron ore prices meant that the company's revenue fell by 10% over the prior corresponding period. But despite that, the US$2.76 or $3.847 per share fully-franked interim dividend will be the second-highest ever doled out by an iron ore company.

This will bring the company's yield to 10.39% and will see it pay out roughly $1.4b to its Australian investors.

What could this look like in the future? Well the company is in a strong position to leverage itself to higher iron ore prices. One analyst even forecast a payout of US$3.70 which at the current RIO stock price delivers roughly a 7% forward dividend.

3. Telstra Corporation Limited (TLS)

Market Capitalisation: $44.13b

Stock price (as of 11/10/2022): $3.83

Dividend yield: 3.55%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 64% / 36%

It's not just Australia's resource sector that pays dividends, but the broader market does as well. Telecommunications giant Telstra (TLS) in the past has been known to pay dividends, and for FY22 investors will receive 8.5c a share. That offering incorporates a 7.5 cent final dividend and a 1 cent special dividend, worth around $980 million.

That’s up 8 cents on the prior corresponding period bringing the total fully franked dividends to 16.5c a share. It's the first increase to the total dividend since 2015 according to outgoing CEO Andrew Penn.

Its current yield is just 3.55% but US investor group Goldman Sachs expects there to be further increases to the dividend in the near future. Its analysts are forecasting a 17 cent per share payout in FY23 and then an 18 cents payout in FY24.

4. Macquarie Group Limited (MQG)

Market Capitalisation: $61.63b

Stock price (as of 11/10/2022): $158.56

Dividend yield: 3.84%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 75% / 25%

The banking sector are popular equities in Australian investment portfolios, particularly for those seeking long term value. The big banks often stand out to investors, and amongst them Macquarie Group (MQG) stands out as one of the best dividends stocks on ASX.

In July 2022, Macquarie paid investors dividends of $1.40 per share at a 40% franking rate. This brought its yield to 3.49%. However this was a substantial drawdown on the year prior. In FY21 the final dividend was $3.35 per share.

Macquarie Bank is also a major benefactor of the current financial situation in Australia. As interest rates continue to rise investors are looking for conservative investments and have been favouring Macquarie Group. This is due in part to its asset management division which separates it from the other big four.

5. New Hope Corporation Limited (NHC)

Market Capitalisation: $5.84b

Stock price (as of 11/10/2022): $6.60

Dividend yield: 6.23%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 62% / 38%

Another one in the resource sector, New Hope Corporation (NHC) explores, develops, produces, and processes coal, oil and gas properties. The company owns interests in two open cut mines in Queensland and New South Wales and has one of the best yields of the last 12 months.

The S&P/ASX 200 Index coal giant will hand investors a $0.31 cent final payout for FY22 financial, up 343% on last year's 7 cent payout. This has been driven by a huge year in revenue for the company, which reported a 143% increase in revenue to $2.55b and a 1,139% increase in net profit.

The already high dividend, combined with a dividend from April, will see investors receive $0.86 cents per share over the financial year. This leaves it trading with a 11.7% yield, placing it among the S&P/ASX 200 Index highest paying dividend stocks on the ASX right now.

6. Whitehaven Coal Limited (WHC)

Market Capitalisation: $9.71b

Stock price (as of 11/10/2022): $10.37

Dividend yield: 5.70%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 59% / 41%

Over the last financial year, Whitehaven Coal, which develops and operates coal mines throughout Queensland and New South Wales has reported record numbers across key metrics. Revenue jumped 216% year-on-year, while a net profit of $1.95b was reported, a big turnaround from FY21's loss of $543.9m.

Its revenue has allowed for substantial dividend growth. In fact, the FY22 payout is the largest in the company's history, with shareholders to receive a cash payment of 40c per share.

Based on its recent closing price, the company has a trailing dividend yield of 5.41% but broker house Morgans expects that to improve. It is forecasting dividends per share of 100 cents in FY 2023 and 64 cents in FY 2024. Based on the latest Whitehaven Coal share price of $8.31, this will mean yields of 12% and 7.7%, respectively.

7. Suncorp Group Limited (SUN)

Market Capitalisation: $13.02b

Stock price (as of 11/10/2022): $10.32

Dividend yield: 4.03%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 63% / 37%

Suncorp (SUN) is one of Australia's leading general insurance and banking companies. There are changes a-foot though, with the company planning to sell its banking arm for $3.3b to Australian and New Zealand Banking Group (ANZ). But the insurance arm continues to be strong, with the group owning the likes of AAMI, GIO and Vero.

In the past, the company has been known as one of the best Australian dividend stocks but this has dropped with recent performances. In FY22, the company reported an increase in revenue but that was not enough to stop the 24% slide in net profits.

This saw the final dividend drop from $0.40 cent a share in FY21 to just $0.17 a share for this financial year. It's also lower than the interim payout of $0.23 cents received back in April. All up, the company has a yield of 3.89% which goes up to 5.5% with the full franking credits. But there is reason to be optimistic about a return to high dividends. Morgans has said the company has a solid underlying performance and expects it to continue to grow earnings. It expects generous yields in the future to as much as 6% in FY23 for a payout of 69.4 cents.

8. Harvey Norman Holdings Ltd (HVN)

Market Capitalisation: $5.27b

Stock price (as of 11/10/2022): $4.11

Dividend yield: 8.59%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 73% / 27%

Retail giant Harvey Norman is also an investor darling for those seeking passive income from dividends. The company has had a rough couple of years due to the pandemic and less foot-traffic in its stores.

In its most recent full-year results, the company reported a 3.6% slip in profits to $811.5m, with earnings down 1.4% in the same period. But its international business is growing, with 25% of its pre-tax profits coming from overseas retail stores.

Despite this, the company raised its annual dividends by 7% to 37.5 cents per share. This gives a trailing yield of 8.9%, which grosses up to above 12%. HVN is earning enough to cover it for now, but has a focus on returning profits to shareholders over growing the business.

9. Fortescue Metals Group Ltd (FMG)

Market Capitalisation: $54.28b

Stock price (as of 11/10/2022): $17.24

Dividend yield: 18.42%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 74% / 26%

Fortescue Metals Group (FMG) needs no introduction, as one of the biggest commodity companies on the ASX. This leaves it susceptible to changes in the commodity price which can have a big impact on the bottom line. This is what happened in its last full-year financial results. The company reported record annual shipments of 189m tonnes but revenue fell 22% due to a reduction in the price of iron ore.

Still, the miner is committed to a higher dividend payout, with investors receiving $1.21 per share in FY22. Combined with February’s 86c interim dividend, shareholders will receive a total of $2.07 per share for the year.

There is a concern around the future performance of the miner due to Chairman Andrew Forrests' $9b green plan. The plan has raised concerns about the impact on dividends, with multiple analysts downgrading plans. Macquarie have lowered their dividend payout ration assumptions to 60% in the medium term, from near 75% currently.

Want to invest in FMG? Learn how to buy Fortescue Metals Group shares

10. Commonwealth Bank of Australia

Market Capitalisation: $161.38b

Stock price (as of 11/10/2022): $94.00

Dividend yield: 4.03%

Stake Platform Bought / Sold (1 Jan 2022 - 7 Oct 2022): 71% / 29%

Commonwealth Bank is one of the largest stocks to watch by market capitalisation. Why? Well the nation's largest bank has had an impressive history of share price growth, rising from $5.40 to now sitting at over $90 (at time of writing).

Investors have not only enjoyed the CBA stock price rise, but also the yield rise. The bank hasn't missed a bi-annual dividend payout in its 31-year history but of course the cost of these have fluctuated.

Most recently the bank declared a final payout for FY22 of $2.10 per share, an increase of 5% on FY21. It brings the total FY22 dividend to $3.85 per share, up 10% from FY21. The bank says it is continuing to target a payout ratio of between 70% to 80% of cash net profits.

This year's dividend was 68% of cash earnings, for a yield of 5.4%. While it didn't provide forward guidance, brokers expect the price to increase due to the changing market conditions.

Key dividend dates

For most investors the key date to watch is the declaration date. This is the day you find out how much the company is set to pay out. This date usually coincides with the release of a company's financials, so with its half-yearly or annual results. The ASX release will contain the amount to be paid per share and the level of franking. It will also state the ex-dividend date, record date and payment date.

The ex-dividend date is the first trading day upon which an upcoming dividend is not included in a share's price. If you buy before this date, you get the payout. If you buy after, you won't. The record date is the day the company makes a list of all its shareholders to allocate dividend payments.

Long term dividend FAQs

How to find a strong long term dividend stock?

The key to finding strong ASX stocks lies in the evaluation of the company, however many investors have their own way of evaluating a stock. But for dividend investors, three important metrics can help you choose a dividend stock for your portfolio: dividend yield, dividend payout growth rate, and dividend payout ratio.

The dividend yield is a ratio expressed as a percentage that shows how much a company pays in dividends relative to its share price. The payout growth rate is the average percentage rate of growth a stock's dividend has experienced over a specific period. Finally, look at the dividend payout ratio, or the percentage of a company's earnings or free cash flow used to cover dividend payments.

Check out our guide on the top Australian shares for long term if you aren't focused on pure dividend stocks.

How to calculate dividend yield?

In simple terms, the yield is calculated by adding up all payouts in the last 12 months (including special dividends), and then dividing the value by the current share price. Yields for a current year can be estimated using the previous year's dividend or by multiplying the latest quarterly dividend by 4, then dividing by the current share price.

The yield is used to measure the amount of cash flow you're getting back for each dollar you invest in an equity position. So essentially it's the return on investment for a stock without any capital gains.

Should I be worried about the companies with a high dividend yield?

A company only has a finite amount of money. So if they are paying out investors, that gives them less money to invest in themselves to make capital gains. So yes a high dividend could be costing a company its growth potential.

It pays to do some research, sometimes a high yield could be a result of a stock price tanking, which would make the yield mathematically rise. Like any investment, you should consider your personal circumstances and if in doubt seek advice from a licensed financial adviser.

What are the best long term dividend ETFs?

There are of course ways for investors to access dividend stocks without putting all their eggs in one basket. There are a number of ASX ETFs in the market that offer dividend payouts.

BetaShares has two such products, the Australian Financials Sector ETF (ASX:QFN), Australian Top 20 Equity Yield Maximiser Fund (managed fund) (ASX:YMAX). QFN comprises the largest ASX-listed companies in the financial sector while YMAX tracks 20 of the largest blue-chip stocks on the ASX.

There are a number of Vanguard ETFs available to investors looking for access to ASX stocks. The Australian Shares High Yield ETF (ASX:VHY) seeks to track the return of the FTSE Australia High Dividend Yield Index. The ETF provides exposure to companies listed on the ASX that have higher forecast dividends relative to other ASX-listed companies.

The companies these ETFs invest in can be found in their product disclosure statements.

This does not constitute financial product advice nor a recommendation to invest in the securities listed. Past performance is not a reliable indicator of future performance. As always, do your own research and consider seeking appropriate financial or taxation advice before investing.



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