Did you know Australia's sharemarket outperformed all others in the 20th century?
One of the reasons our market performed so well can be credited to the dividends paid.
Indeed, the ASX is renowned for its enormous dividend yields.
Therefore, after the reasonably strong reporting season and in light of record-low interest rates, it's perhaps unsurprising to hear that investors stand to receive $18 billion in dividends over the next six weeks.
As reported by Fairfax press today, shareholders will be cashed up as famed dividend payers such as Woodside Petroleum Limited (ASX: WPL) and Suncorp Group Ltd (ASX: SUN) each part with hundreds of millions of dollars later this week.
However, the question on everyone's mind is: Where is all that cash going to go?
After all, interest rates on term deposits and bonds are painfully low. And the property market appears pricey, despite anecdotal evidence suggesting it might be coming off the boil.
Therefore, many Australians taking part in the looming dividend bonanza are very likely to reinvest the cash in sharemarkets both locally and abroad.
With that in mind, here're four ASX dividend stocks that could be worthy recipients of the cash.
- Coca-Cola Amatil Ltd (ASX: CCL) – dividend yield: 4.8% partially franked.
While not a risk-free investment by any means, the distributor of Coca-Cola and Beam beverages looks cheap at today's prices and is offering a compelling dividend yield.
- Retail Food Group Limited (ASX: RFG) – dividend yield: 5.6% fully franked.
The owner of Donut King, Gloria Jeans, Crust Pizza and much more has suffered a heavy selloff in recent months, but its expansion internationally holds great promise.
- Flight Centre Travel Group Ltd (ASX: FLT) – dividend yield: 4.3% fully franked.
Flight Centre is another mid-cap Australian business growing quickly overseas and which appears overlooked by investors. It may be a bumper ride for the travel agent in the near-term, but it's got loads of cash at its disposal and a sound growth strategy is underway.
- Telstra Corporation Ltd (ASX: TLS) – dividend yield: 5.4% fully franked.
Telstra shareholders can expect a dividend to hit their accounts later this week, or early next week. For investors, following the recent share price retraction, Telstra is now looking a lot more compelling at its current price of $5.60.
Buy, Hold or Sell
With interest rates low and quality ASX-listed companies, such as those above, paying comparable yields well over 5%, the sharemarket will continue to attract smart money. Of the four stocks above, I think all but Telstra are deserving of a buy rating today. Indeed, the telco will have to drop towards $5 a share before I'd buy in.
