This 8.4% ASX dividend stock is my top pick for immediate income

You may not have heard of this Kiwi business, but it has all its ducks in a row to keep rewarding investors.

| More on:
A man in his 30s holds his laptop and operates it with his other hand as he has a look of pleasant surprise on his face as though he is learning something new or finding hidden value in something on the screen.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

With share prices notoriously volatile and economic uncertainty striking fear into investors, it's no surprise many people are seeking the comfort of dividend shares.

But with the ASX packed with dividend payers, which one to choose?

You won't want to end up with a "dividend trap" that only has a high yield because of a falling share price, or a flailing business that could suddenly cut its distributions.

Here is one suggestion that could avoid all those pitfalls:

How does $350 monthly income sound?

New Zealand company Fletcher Building Ltd (ASX: FBU) is a construction materials provider that's listed on the ASX.

The stock is currently paying out a handy dividend yield of 8.4%.

Not only that, the latest reporting season showed that the business seems to be heading in the right direction.

"The company reported revenue of $4.3 billion, up 5% on the pcp of 1H FY22," said The Motley Fool's Bronwyn Allen in February.

"Earnings before interest and tax before significant items totalled $360 million, up 8%, with an improved EBIT margin of 8.4%."

Being a foreign company, no franking credits are given.

But even with an unfranked 8.4% yield, a $50,000 investment would provide shareholders with a $350 monthly income.

The outlook for construction stocks

Amid worries about rising interest rates impacting the construction industry, the Fletcher Building stock price has admittedly dropped 3.7% year to date.

Created with Highcharts 11.4.3Fletcher Building PriceZoom1M3M6MYTD1Y5Y10YALLwww.fool.com.au

However, Wilsons equity strategist Rob Crookston said last week the negative sentiment towards housing could make it a perfect contrarian play right now.

"The macro is starting to shift in the US and in Australia, with central banks looking close to the end of tightening cycles," he said.

"There are strong structural tailwinds behind the US and Australian housing markets."

There is even speculation that Fletcher could buy out Australian rival CSR Limited (ASX: CSR)

The Kiwi stock is a hit among professional investors at the moment.

Ten out of 14 analysts currently surveyed on CMC Markets rate Fletcher Building shares as a buy. Nine of those reckon it's a strong buy.

CMC Markets is predicting that Fletcher Building will maintain its dividend yield above 8% for the next year or two at least.

Should you invest $1,000 in The Kraft Heinz Company right now?

Before you buy The Kraft Heinz Company shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and The Kraft Heinz Company wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

A man looking at his laptop and thinking.
Dividend Investing

Here's the ANZ dividend forecast through to 2027

It looks like we might have seen the peak for this bank's dividends.

Read more »

A smiling woman holds a Facebook like sign above her head.
Dividend Investing

Bell Potter names the best ASX dividend shares to buy in May

Bell Potter thinks these are among the best shares for income investors to buy right now.

Read more »

A businesswoman on the phone is shocked as she looks at her watch, she's running out of time.
Dividend Investing

Hoping to bank the next dividend from NAB shares? Better hurry…

NAB shares will pay an interim dividend of 85 cents per share next month.

Read more »

Person pressing the buy button on a smartphone.
Dividend Investing

I think these 2 ASX dividend shares are buys for income in May

These stocks have plenty going for them.

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Dividend Investing

Accelerate passive income: 2 LICs with dividend yields above 7%

With several rate cuts on the horizon, term deposits are starting to look less attractive.

Read more »

A happy male investor turns around on his chair to look at a friend while a laptop runs on his desk showing share price movements
Dividend Investing

Brokers name the ASX dividend stocks to buy now

These stocks have been given buy ratings by analysts. Here's what you need to know.

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Dividend Investing

Why is the Westpac share price falling for a fourth consecutive day?

The Westpac share price is down by more than 4% today.

Read more »

Man holding out Australian dollar notes, symbolising dividends.
Dividend Investing

Here's everything you need to know about the latest ANZ dividend

ANZ just reported its half-year results and announced its interim dividend.

Read more »