Got some VAS, got some FMG. FMG is paying around 12% with franking so happy with that.
My pick so far are:
FMG
WBC
TLS
NAB
What's your blue chip with high dividends?
Blue Chip Shares with High Dividends? Your Picks?
Aerith-Waifu on 22/10/2023 - 17:16
Comments
Thanks for your input
Are you in retirement and are looking for income? If not then don't use a dividend strategy, as you are paying additional tax which is reducing your total return.
Stock screener for top dividend stocks (based on historical payout). Choose your 'blue chips' as desired:
https://www.marketindex.com.au/highest-dividend-yield
Note that high yields could be due to a recent sharp drop in share price, so the dividends paid going forward could be significantly lower (or cut completely).Don't chase higher dividends at the expense of capital losses. Look at total after tax returns for your specific circumstance.
Thanks for sharing
don't use a dividend strategy, as you are paying additional tax which is reducing your total return.
Given the franking credit regime in Australia, this makes no sense.
Please explain your thought processFirstly that statement was prefaced on not being in retirement.
If you are working and earn over $45K (which I would assume is most fully employed people), then your marginal tax rate is higher than the company tax rate. As such any fully franked dividends (and unfranked) will still require further tax to be paid on your part to make up the difference between your marginal tax rate and the companies tax rate.
Personal tax rate is at least 32.5c for each $1 over $45K.
https://www.ato.gov.au/Rates/Tax-rates---Australian-resident…Company marginal tax rate range from 25% to 30%
https://www.ato.gov.au/Rates/Changes-to-company-tax-rates/But the above is not the real reason I don't go for dividends.
Good companies that are able to reinvest their earnings back into the company should be able to generate a return much higher I can get elsewhere. As such if they just retain the earning rather than pay it out as a dividend they should be able to grow their earnings much quicker (compound growth).
(this is one reason why I also like to invest in US based companies, as they generally dont pay much in dividends, but reinvest back into the company)Alternatively if you were to use the dividends paid out to buy more shares into that same company, your would first have to pay additional tax (as the franked dividends are only taxed at 25%-30%). So you are getting less than if the company just retained the profits from the start.
There are a number of other reasons, which are more nuanced, so I wont go into further details here (not that I could be bothered to write it all up here).
If you are interested there are a lot of resources out there. Just keep reading and you may also come to the same conclusions.
disclaimer - this is NOT financial advice just a mid-30s dads opinion - depends on your investment horizons and personal situation of course
wouldn't own any of the above mentioned stocks 'bar' maybe TLS - wouldnt touch WBC or NAB id buy MQG instead
Coal stocks are paying pretty good but they're full valued now you probably missed the boat on New hope and White haven coal
depends on where you think interest rates are going in the next 12-18 months you might want to look at some of the better quality retail and commercial property stocks they have all been belted in the past 12-24mo - tickers like LOV, CIP, JBH, PMV come to mind
the other surprisingly beaten down sector [dont pay great dividends but will grow] is healthcare RMD, CSL in particular look cheap
i'd personally wait for Iron prices to tank like a stone in water ie sub 60 USD a tone and then you can load up on your Iron miners BHP, FMG, RIO
other potential worth buying companies TWE [China is starting to remove restrictions on Australian Wine]
otherwise just buy SOL they increase their dividends EVERY year and have for like 3 decades straight they also beat the market/VAS over the long term
good luck investing
Good advice, thanks will look up SOL
SOL if you want dividends + growth.
What pays a good div today won't necessarily do that next year and vice-versa.
My biggest dividend returns on amount invested for last FY were:
Shaver Shop
CommBank
Coles
Fortesque
Harvey Norman
Macquarie Group
WAM Capital
WAM Research
Westpac Bank
WesfarmersI've got plenty that were great dividend returns and have gone backwards.
I'm not sure why everyone has a hard on for SOL as a dividend play. It's a good company but the divs aren't spectacular.
Why bother with dividends? It’s a long journey and you’re getting a large chunk of the company’s profits taxed as income every year along the way. Why not go for growth stocks in the US and defer most of the tax to when you’re not earning a salary.
Dividends are very misunmderstood - in so much as they are NOT a great idea for many investors as it's essentially FORCED withdrawal of profits. Franking credits are a caveat to this but not necessarily of as much benefit to all investors.
Personally I prefer holdings that pay low dividends and bolster their share price by retianing profits, so that I can take profits only as much profits as I NEED and when I CHOOSE i.e after getting CGT discount for 12mths+ etc.
Worth reading before you leap in with high div paying holdings:
https://passiveinvestingaustralia.com/dividends-are-not-safe…
https://passiveinvestingaustralia.com/dividend-investing-vs-…All these people talking about dividends being bad. I would like to offer opposite view: Margin lending with an investment loan. I want those income so I can offset an interest only loan and multiply my earnings. I don't see this any difference to investment properties.
Firstly, literally NOBODY in the entire thread said dividends are bad.
Secondly, why rather than using dividends could you not sell some of your holdings (which presumably have appreciated in value, due to not having paid dividends & retained the capital? - reasonable assumption as you're ASSUMING what you buy will pay a dividend, which is far from certain).
I mean FMG's dividends are good as long as Iron Ore price holds.
If you're cool with playing commodity cycles, and have no ethical objection, then can't look past the thermal coal names WHC (n.b. can't pay divvie for a bit under their new purchase), YAL, NHC and TER all pay double digit grossed up divvies.
Otherwise, BOQ's dividend is 'attractive' as long as they don't need to cut (which is a risk), and a few LICs like CDM, WAM etc are always liked for divvie plays and seen 'lower risk' because of the diversified holdings.