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.

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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.

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.

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.

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