When looking for reliable dividend income from ASX-listed companies, investors should be wary of high payout ratios. While a high dividend may seem attractive, it’s crucial to ensure that these payouts are backed by the company’s earnings. A high payout ratio could indicate that dividends may not be sustainable in the long run, leading to financial troubles for the company, as seen with firms like Lottery.
Here are the top 10 dividend stocks in Australia:
1. Collins Foods (ASX:CKF) – Dividend Yield: 3.14%, Dividend Rating: ★★★★★☆
2. Nick Scali (ASX:NCK) – Dividend Yield: 5.27%, Dividend Rating: ★★★★★☆
3. Fiducian Group (ASX:FID) – Dividend Yield: 4.11%, Dividend Rating: ★★★★★☆
4. Charter Hall Group (ASX:CHC) – Dividend Yield: 4.05%, Dividend Rating: ★★★★★☆
5. Fortescue (ASX:FMG) – Dividend Yield: 9.29%, Dividend Rating: ★★★★★☆
6. Centuria Capital Group (ASX:CNI) – Dividend Yield: 7.21%, Dividend Rating: ★★★★★☆
7. Eagers Automotive (ASX:APE) – Dividend Yield: 7.10%, Dividend Rating: ★★★★★☆
8. Premier Investments (ASX:PMV) – Dividend Yield: 4.54%, Dividend Rating: ★★★★★☆
9. Diversified United Investment (ASX:DUI) – Dividend Yield: 3.17%, Dividend Rating: ★★★★★☆
10. Australian United Investment (ASX:AUI) – Dividend Yield: 3.59%, Dividend Rating: ★★★★☆☆
One of the top picks is New Hope (ASX:NHC), with a dividend yield of 8.3%. While the yield is attractive, the company’s dividends may not be well supported by cash flows, with a high cash payout ratio of 90.2%. Recent board changes could impact future financial strategies, but historically, dividend payments have been volatile and unreliable.
On the other hand, Lottery (ASX:TLC) has a dividend yield of 2.8%, which falls below the market average. The company’s payouts are not adequately covered by earnings and cash flows, with payout ratios exceeding 100%. This financial strain, coupled with insufficient coverage from operating cash flow to debt, poses risks to future dividend reliability and growth.
Investors can explore the full list of 27 stocks from the Top ASX Dividend Stocks screener. It’s important to manage investments wisely, and tools like Simply Wall St’s portfolio can help optimize outcomes. Additionally, the Simply Wall St app offers detailed insights into global stock markets.
Please note that the information provided is based on historical data and analyst forecasts, and our articles are not financial advice. We aim to provide long-term focused analysis driven by fundamental data. Simply Wall St does not have any positions in the mentioned stocks.