With the big four banks crashing and dragging down the S&P/ASX 200 (Indexasx: XJO) (ASX: XJO) in the past six weeks, it's time many investors and retirees considered dividend stocks outside of the usual suspects.
For investors contemplating leaving their cash in term deposits with rates of 2.5% or lower, consider that including franking credits, each of the following 10 stocks is paying more than double the current interest rate available on term deposits – in simple terms, 5% or more.
But not only will these companies deliver better rates now, but many, if not most, are expected to increase their dividends over time. Not only do investors get to beat term deposits in the short term, they are also likely to receive growing dividends in the years ahead.
So here's my list of 10 dividend stocks:-
| Company | Current dividend yield |
| Australian Foundation Investment Co.Ltd. (ASX: AFI) | 3.7% |
| Milton Corporation Limited (ASX: MLT) | 3.9% |
| Cedar Woods Properties Ltd (ASX: CWP) | 5.3% |
| Insurance Australia Group Limited (ASX: IAG) | 7.1% |
| Flexigroup Limited (ASX: FXL) | 5.1% |
| RCG Corporation Limited (ASX: RCG) | 3.7% |
| Primary Health Care Limited (ASX: PRY) | 3.9% |
| Woolworths Limited (ASX: WOW) | 5.1% |
| Wesfarmers Ltd (ASX: WES) | 4.7% |
| Vita Group Ltd (ASX: VTG) | 3.7% |
Source: CapitalIQ
You might notice that dividend yields are before we take into account franking credits, but all of the above companies pay fully franked dividends. As a result, they all gross up to 5% or more.
I've also selected two listed investment companies in Australian Foundation and Milton Corp. These two companies can give you a wide exposure to many Australian stocks and have consistent records of growing dividends over the long-term. In fact, the companies above provide wide diversification across sectors and industries.
As I mentioned above, growing dividends can represent a large portion of income in future years. Consider that Woolworths' shareholders who bought into the company when it floated at $2.45 per share are now receiving $1.37 in fully franked dividends – more than a 50% yield! And that's before we even consider capital gains too.
