History has shown that when it comes to building long term wealth, investors who accumulate shares in well managed companies with sustainable business that pay a steady, growing stream of dividends are usually the most successful. This resource is dedicated to investors in Australian shares who wish to pursue a strategy that has investment in ASX listed dividend paying stocks as its central theme. Dividend investment strategies are efficient for non-professional investors to execute and as we will show below, deliver excellent returns compared to other investment strategies. The best shares provide an exponentially growing dividend income stream while building
Introducing the Five Star Dividend Rating System
Dividends.com.au is proud to announce the first publicly available rating system for Australian dividend stocks. We have developed a proprietary Five Star Dividend Rating System that rates each company’s shares based on dividend history plus technical and fundamental attributes. All ASX shares are allocated a rating of up to five stars on the basis of the following 5 key criteria.
Stocks are firstly rated on their gross dividend yield. Gross dividend yield is measured as total dividends plus franking credits paid over the last 12 months divided by the stock’s share price. Dividend yield is an important investment performance measure but should not be looked at in isolation. For example, an extremely high yield may indicate that the company’s share price has recently been downgraded by the market due to poor earnings prospects, or alternatively a low yield may indicate a stock that currently pays a zero to low dividend, preferring to invest the cash in their business with strong earnings growth prospects.
Some companies are more reliable than others when it comes to maintaining dividends. Dividend reliability measurement is based on the number of years the company has been paying dividends, discounted for any reductions or missing of dividends. It also takes into account whether forecast earnings growth is positive and the whether the payout ratio is sustainable.
Historical Dividend Growth
All other things being equal, dividend growth is generated from either an increase in earnings or an increase in dividend payout ratio. If the dividend growth is accompanied by earnings growth it signals that the company is operating in a profitable space. Using the Dividends.com.au database of historical dividend payments we measure and rate past dividend growth. Stocks with high levels of dividend growth over 10 years are given high star ratings, while stocks with negative to flat dividend growth are given zero to low ratings.
The relative strength is a technical measure of recent share price performance. This is a relative measure of the companies share price history relative to the rest of the market. By checking relative strength we can confirm that a high yielding stock simply hasn’t had it share price beaten down because of market expectations of lower earnings ahead. Dividends.com.au calculates to price performance of the stock over the previous 3 months inclusive of gross value of dividends paid relative to all other ASX stocks.
Projected Earnings Growth
Projected earnings growth per share over the next five years is an important indicator or dividend sustainability and growth. Stocks with high projected earnings growth as forecast by analyst consensus receive a high star rating while stocks with negative to flat earnings growth prospects receive a zero to low star rating.
Overall Dividend Star Rating
This an average of the 5 other dividend measures above and provides a quick and easy reference. For, more detailed dividend information, check the dividend history, technical and fundamental data on the Dividend History page.
Top Rating Dividend Stocks
Dividend Star ratings adjust to changes in dividend performance, technical and fundamental data. The current top 10 dividend stocks with a market capitalisation greater than $1 billion as ranked by Dividend Star Rating are listed below:
|CBA||Cwlth Bank of Aust||7124||431||-78.7%||534.31||1.24x||3.64%|
|AIA||Auckland Intl Airport||656||20.05||-116.6%||49.81||2.48x||9.40%|
|SUL||Super Retail Grp||935||49||-87.1%||65||1.33x||16.15%|
|RHC||Ramsay Health Care||5570||144||-100.2%||186.7||1.30x||11.84%|