Markets are rallying. Invariably, small caps do not lead a rally, but once the rally starts they tend to perform very well.
In such a scenario, identifying good Dividend Stocks still remains rocket science for many. Particularly for those investors who assume that with a rallying market, and a dovish Fed, it is the ripe time to invest in any stock just with a good dividend yield.
That alone is a perfect recipe to get doomed. In our long history of stock research, we have seen even savvy investors succumbing to this temptation of just looking at dividend yield. Not all high yield dividend stocks are smart investments. However, if chosen wisely, these result in regular passive income.
Stocks with strong financials, consistent, with possibly enhancing dividends and an adequate pay out ratio hold a competitive edge.
It is a timeless proposition.
Fortescue Limited (ASX: FMG)
Fortescue Limited has a strategic and diversified approach across its key operational areas.
The company’s Iron Bridge project plans to be Australia's largest magnetite project, operating on renewable energy by 2030. Iron Bridge has exceeded expectations with an iron ore grade of over 68% on its initial run. The Pilbara Energy Connect project, coupled with the Chichester Solar Gas Hybrid Project, will contribute to 25% of Fortescue's stationary energy needs by FY25.
Through these innovative and efficiency-driven initiatives, Fortescue is positioning itself for success in its transition from primarily being an iron ore business to a global player in metals and green energy.
FMG has been maintaining a Dividend Paying Strategy consistently with an impressive dividend yield of 8.25%.
Whitehaven Coal Limited (ASX: WHC)
Whitehaven Coal Limited made agreements with BHP and Mitsubishi to buy the Daunia and Blackwater coal mines, which will help achieve their plans much faster. This will result in a bigger and more varied business, with more focus on long-lasting, metallurgical coal assets that are cost-effective and attractive.
The fundamental need for high-CV thermal coal is still high, especially for the production of high-efficiency, low-emissions (HELE) electricity in Asia's established and developing markets. Due to underinvestment in new supply and mine depletion, the seaborne market for high-CV thermal coal is experiencing a structural supply shortfall that is expected to grow, supporting strong long-term pricing dynamics for the commodity.
Whitehaven continues to maintain franked dividends within the targeted pay out ratio of 20-50% of NPAT generated from existing operations (i.e. excluding the acquired Assets); the current yield being 7.27%.
Kina Securities Limited (ASX: KSL)
Kina Securities Limited has a long-standing tradition of providing consistent returns to its shareholders through regular dividends. The company delivered an impressive dividend yield of 9.6%, making it an attractive option for investors seeking stability and reliable returns with lower risk. KSL has demonstrated its dedication to shareholders by maintaining a dividend-paying strategy.
The consistent dividend pay outs enhance the appeal of KSL for investors seeking both financial stability and a steady income stream.
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