Screening for regular source of passive income leads to some of the best dividend paying stocks. Not only are they consistent but also high dividend stocks.
Bank of Queensland (ASX: BOQ)
Bank of Queensland, is among best long term dividend stocks having made significant strides in its digital transformation journey, with much of the retail digital bank now fully delivered. This transformation, focused on simplifying the operating model and distribution channels, is set to enhance customer and employee experiences while positioning BOQ as a specialist bank delivering sustainable shareholder returns. Despite the challenging financial environment in FY24characterized by lending margin compression in home loans and heightened competition for deposits due to the refinancing of the term funding facility BOQ achieved after-tax cash earnings of $343 million and a statutory profit of $285 million.
One of the quality dividend stocks, it declared a dividend of 17 cents per share, reflecting a yield of approximately 5.4%.The bank has been consistently providing investors with dividends. The bank has aligned its business model to meet the growing demand for digital banking, exemplified by a vastly improved user experience on its new digital platforms compared to legacy systems. Notably, BOQ successfully piloted its digital mortgage product in August 2024, an important milestone that highlights the bank’s potential to scale in the highly competitive home loan market. The digital mortgage offering not only streamlines the application-to-funding process for customers but also enables BOQ to reduce costs and increase productivity in mortgage distribution. Full rollout to customers is anticipated in FY25.
BOQ’s digital transformation also includes migrating customers to new digital platforms and decommissioning legacy IT systems, thus simplifying its complex technology landscape. This modernization effort will lower the bank’s cost to serve, enhance operational flexibility, and improve the efficiency of change management. During FY24, over 5% of legacy IT assets were decommissioned, with 57% of total IT assets now in the cloud. BOQ has completed the first phase of its cloud transformation, creating a next-generation cloud platform to support its retail and business banking services. This transformation levels the playing field with digital-native competitors, providing a secure, flexible, and scalable foundation for BOQ’s future growth. A strengthened partnership with Microsoft underpins this progress, with BOQ leveraging Azure Cloud and Microsoft’s advanced data solutions to enhance customer-centric capabilities.
Strategically, BOQ is aiming to optimize risk-adjusted returns and boost ROE by shifting its revenue mix toward higher-margin business lending in specialized SME sectors where it has a competitive edge. BOQ’s unique finance company structure allows it to compete effectively, benefiting from lower costs relative to peers and supporting targeted growth in these sectors.
Tamawood Limited (ASX: TWD)
Tamawood Limited (ASX: TWD) has delivered a strong financial performance in FY24, with a notable profit before tax of $8.03 million, reflecting a remarkable 165.7% increase compared to FY23's $3.02 million. The company's cash position had also brightened, ending the year on $6.114 million in cash, versus $5.231 million in FY23, and remains completely debt-free. Despite the challenging landscape in the Australian home building sector, where insolvencies have increased and many competitors are struggling, Tamawood has remained profitable.
Among quality high yield dividend stocks, it declared a final dividend of 9 cents per share, fully franked, to be paid in December 2024. It continues to ensure regular dividend payments.
In terms of operational efficiency, Tamawood has a competitive edge in its cost structure. Its corporate and employee expenses are significantly lower than those of its competitors, with an approximate $40,000 cost advantage per home build. This is largely due to the company's efficient operations, including the use of Project DeRisk software, which has allowed them to adjust prices quickly and maintain margins despite supply chain fluctuations. Additionally, Tamawood has also invested in its own product supply chain through the acquisition of AstiVita Pty Ltd, ensuring more predictable pricing and continuity of supply for key home building materials such as tapware, appliances, and solar products.
The home building market in Australia has shown signs of improvement, with better supply chains and higher margins contributing to Tamawood’s increased earnings. The company’s focus on infill builds, secondary dwellings, and regional construction has positioned it well for future growth, especially as larger builders shift their focus to commercial work or speculative projects. Tamawood's ability to avoid landbanking and unnecessary overhead costs, coupled with its direct control over approximately 15% of the products used in its homes, gives it a strong foundation for navigating the current market conditions. Overall, the company's strategic investments, efficient operations, and strong financial position have allowed it to outperform many of its competitors in the current home building environment.
Source: Company’s Report
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