Australia's share market is home to some great dividend stocks. There are a number of blue-chip S&P/ASX 200 (INDEXASX: XJO) stocks which offer yields much greater than 5% plus franking.
However, outside the index there are a number of stocks with yield ratios that put their bigger counterparts to shame. Here are three I have firmly on my buy list.
1. WAM Capital Limited (ASX: WAM) is an investment company managed by Wilson Asset Management. It focuses on finding undervalued companies by rating their management, free cashflow and industry position. They then hold the company until they believe it has reached its zenith. Although dividends will change along with market conditions, its trailing 6.4% fully franked dividend is impressive.
2. As the owner of The Athlete's Foot and exclusive distributor of high-quality footwear and apparel, RCG Corporation Limited (ASX: RCG) is a retailer which is a perfect fit for investors looking for growth potential and a big dividend. Since 2009 (when it started paying dividends) it hasn't cut or reduced its payout once. Currently, RCG shares change hands on a trailing dividend yield of 7.8% fully franked.
3. Lastly, Infomedia Limited's (ASX: IFM) 3.5% fully franked dividend might not take your breath away but when combined with its huge growth prospects, I'm sure you'll be happy enough. In the past 10 years, the company's annualised total shareholder return is 15.4%. In coming years, analysts are forecasting both dividends and earnings per share increases. Furthermore, its recent addition to the S&P/ASX 300 (INDEXASX: XKO) index means it'll likely enjoy much more analyst and fund manager coverage.
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