What Are Dividend Stocks?
Dividend stocks are publicly traded companies that regularly share their profits with investors through dividends. It’s important to realise that you can also buy stocks that don’t offer a dividend payment. There is absolutely no requirement for any company to provide dividend payments on its stock. Therefore, a company might reinvest its money and profits into its expanding business to fuel further growth. In such a case, the goal is to increase the value of its shares rather than pay a dividend.
On the other hand, a dividend is part of a company’s profits that it decides to pay its shareholders. Dividend stocks in Australia usually pay out their dividends once or twice per year after the company announces its half-year or full-year results. For example, stock dividend payment dates 2024 might be in June and December, but it depends on the company. If the company has already paid tax on the profits, it can pass this on as franking credits, along with the dividends, to its stockholders. These franking credits might allow an individual investor to reduce the amount of personal income tax that needs to be paid.
Dividends are worked out and paid on a per-share basis. Depending on the company, investors have the option to receive a cash payment dividend or to reinvest the dividend into buying new shares in the company to grow their portfolio. To compare their returns on investment, many shareholders calculate the dividend yield of their portfolio, which is the value of the dividend divided by the share price.
Why Invest In Dividend Stocks?
Why invest in the best Australian dividend stocks?
- You can profit in two different ways with dividend stocks. First, you receive regular dividend payments. Second, the value of the stock itself can also rise over time, increasing your assets.
- It’s a predictable form of passive income. You can look over the track record of dividends for a particular stock and estimate what the future returns might look like.
- They are usually lower risk than non-dividend stocks, which tend to be more volatile. This is because dividend stocks are usually quality businesses that have predictable earnings.
- If the company has already paid tax on the profits before it issues the dividends, the shareholders can receive a “franking credit” to reduce any tax they need to pay.

- Many companies offer you the opportunity to reinvest the dividends to buy more stock and grow your assets. Reinvesting your dividend income in this way can really boost future returns on your investment portfolio.
How To Choose The Best Dividend Stocks?
How do you find the best dividend stocks, including the best bank dividend stocks, in Australia?

- Does the stock have a history of dividend performance? If you’re looking for regular income, you should consider companies that have a good track record of paying high dividends. Generally, these are larger companies on the Australian Securities Exchange (ASX). As an extra tip, you’ll find that smaller companies tend to focus on their growth. So they tend to reinvest profits to grow the business rather than pay dividends.
- Company stability is an important factor. Does the company you’re considering have a strong balance sheet and stable earnings growth? If its earnings are too volatile, there might be better candidates for your investment in dividend stocks.
- What is the growth potential of the company’s sector? Is it shrinking or expanding?
- Does the company have relatively low capital expenditure? In Australia, if a company’s capital expenditure is too high, such as with an airline that needs to maintain and upgrade to new aircraft every few years, there’s far less money to distribute as dividends.
Top Dividend Stocks To Watch On The ASX
What are the advantages of investing in high dividend stocks on the ASX? These are larger companies with an excellent record of paying dividends to their investors. These companies include (for example):

- Telstra
- Commonwealth Bank
- BHP Group
- Woolworths
- Westpac Banking Corporation
Not only do these top dividend stocks on the ASX provide a regular income stream for investors, but you can also reinvest your dividends to purchase more stock. This can help create a ‘snowball’ effect where the capital value of your shares increases alongside their higher dividend returns.
How this FY25 Dividend Portfolio can help you.
Unlock the potential of dividend investing with our free ASX dividend portfolio download. It's a valuable tool designed to provide you with high-yield stock recommendations, helping you grow your wealth steadily and make informed investment decisions.
What's included in the report for each stock
Forward Annual Dividend Yield
Offers a glimpse into the expected dividend returns for the upcoming year, allowing investors to anticipate income generation.
Trailing Annual Dividend Yield
The trailing annual dividend yield is the dividend paid out over the past 12 months, expressed as a percentage of the current share price. It's a crucial metric for investors seeking income from their investments.
5-Year Average Dividend Yield
Provides a historical perspective on a company's dividend consistency and growth potential.
Payout Ratio
Helps evaluate a company's ability to sustain its dividend payments based on its earnings.
How Sharewise Helps You Choose The Best Dividend Stocks.
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