Are you into BBW? That stands for… big blue-chip wealth.
All investors know about using high-yield stocks to generate portfolio income. However, some of the best ones to hold are the blue-chip stocks of big, well-established companies. They can keep paying steady and growing dividends over many years, creating compounding wealth.
Here are two companies paying dividend yields fatter than some of the big four banks and as market-leading companies they will be doing business for many years to come.
Woodside Petroleum Limited (ASX: WPL), the $35 billion oil and gas producer, has a strong earnings growth trend since 2009. It generates steady income from its LNG projects offshore near WA and currently is looking at potential LNG development in several key locations in Africa as well as South East Asia.
But what really thrills dividend investors is its fully franked 5.4% dividend yield. This month it announced a record high in half-year net profit – US$1.1 billion. Along with it came a 34% interim dividend increase to US 111 cents per share. Woodside has a good track record for raising dividends in the past and could be a stable long-term dividend payer in the future as well.
Suncorp Group Ltd (ASX: SUN) is both a leading insurance company and Australia's fifth largest financial services business. It's now tipping the dividend scale at a whopping 5.8% yield fully franked. The share price is up about 18% in the past six months and recently hit a new 52-week high of $15.37.
From a strong full-year earnings result, the final dividend rose from 30 cents per share to 40 cps. What's more is the company announced a special dividend for the third year in a row, 30 cps, up from 20 cps last year. That brings the full year dividend to 105 cps, which is 40% higher than last year's. Suncorp is conducting a business restructure to slim down its costs, possibly saving as much as $265 million annually by 2016. Those savings could help dividends stay just as fat over the long term.
