Australia’s Top-10 Blue Chip Income Stocks

Australia's top 10 blue-chip income stocks

Relative safety and a great yield, what more could you ask for?

Andrew Mudie

Andrew joined the growing team of Motley Fool freelance writers in mid-2013 following years of personal development as a passionate self-taught sharemarket investor. At the time, Andrew was an engineer by trade, writer by hobby, and an investing nerd by passion who spent far too many breaks reading, writing and learning. Andrew’s first investing lesson came with his first stock selection in 2011 when takeover rumours caused a spike and subsequent plunge in the share price of Woodside and then the 21% fall in the market through mid-2011. The next four years of investing saw Andrew dabble in a vast array of strategies until settling on his favourite investment methodology, which is closely aligned with that of the Motley Fool: Fundamentals-based long-term buy-and-hold of great companies at great prices.

Published June 26, 2014 7:22 am AEST

Investors all around the world are obsessed with income. The best example of this is the major European banks who have purchased so many Spanish and Irish Government bonds that they are now yielding below that of Australia.

This is despite these economies still being fundamentally unstable, with high account deficits, high unemployment and low interest rates to spur their economies.

Yield Focus to Remain

I am of the opinion that the hunt for yield will continue through the rest of 2014 and likely well into 2015 as Europe is just now entering a new stimulus period, the U.S. has predicted that interest rates will be staying low for the foreseeable future, and Australia is in a similar position.

Even the longest five-year term deposits entered into back in 2009 are now coming up to completion. More and more investors and retirees are being forced into the share market in order to receive a decent income as the best term deposits are earning just over 4% before tax.

These investors are looking for big, reliable names that should be relatively resilient in any share market or economic downturn. As a result, I've pulled together a list of the top 10 dividend-yielding blue-chip stocks (as defined by market cap) and listed them below with their trailing yield.

The top 10

CFS Retail Property Trust 1 (ASX: CFX), 6.4% yield, 0% franking
Insurance Australia Group Limited (ASX: IAG), 6.2% yield, 100% franking
Westfield Retail Trust (ASX: WRT), 6.1% yield, 0% franking
Stockland Corporation Ltd (ASX: SGP), 6% yield, 0% franking
National Australia Bank Ltd. (ASX: NAB), 5.9% yield, 100% franking
Woodside Petroleum Limited (ASX: WPL), 5.8% yield, 100% franking
Coca-Cola Amatil Ltd (ASX: CCL), 5.6% yield, 75% franking
Telstra Corporation Ltd (ASX: TLS), 5.5% yield, 100% franking
DEXUS Property Group (ASX: DXS), 5.3% yield, 0% franking
Sydney Airport Holdings Ltd (ASX: SYD), 5.3% yield, 0% franking

Overall, the group has a couple of names that have suffered over the past 12 months, and some that have been long-term outperformers. These 10 stocks have solid outlooks over the long term, but capital gains may be limited due to their size and gains over the past 24 months.

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