As many investors have found out from first-hand experience, dividends play an important part in generating high returns from the stock market.
Many studies over the years have also shown that dividends can make up as much as 50% of long-term returns. And famed Australian investor Anton Tagliaferro's Australian Share Fund has returned 11.6% on average each year, with 5.2% of that coming from dividends.
So if you have $20,000 to invest, here are 5 dividend stocks to consider for your portfolio…
Telstra Corporation Ltd (ASX: TLS)
It's hard to go past Telstra, with its consistent 28 cent dividend and fully franked yield of over 5%, despite the share price hitting $5.46 recently. As a bonus, the dividend could rise, and a special dividend or capital return could also be on the cards.
Insurance Australia Group (ASX: IAG)
With a 6% fully franked dividend, a large market share in Australia and New Zealand's general insurance market and strong brands, it's also hard to go past IAG.
Suncorp Group Ltd (ASX: SUN)
Expected to pay a fully franked dividend of over 6% in the 2015 financial year, Suncorp also holds surplus capital, which analysts say could be used to pay a special dividend. The company has form on that basis, declaring a number of special divs in recent years.
Sydney Airport Limited (ASX: SYD)
Paying a dividend yield of more than 5% (unfranked), Sydney Airport is a monopoly business, and has first dibs on whether it wants to own and operate Sydney's second airport at Badgery's Creek. I expect the company to say yes please!
Reef Casino Trust (ASX:RCT)
Reef owns the land and buildings containing the Cairns Reef Hotel Casino, and at the current price of $3.68, pays a dividend yield of 7.6% (unfranked). As a potential bonus, the company is the subject of a $4.34 takeover offer – a substantial premium to today's price.
If you want our absolute best idea, discover our top dividend stock for 2014/15 in this brand new report…
