3 ASX Dividend Stocks to buy in 2024
The majority of conventional and conservative investors in Australia prefer to keep high-yield dividend-paying ASX stocks in their portfolios. The stock dividend carries substantial importance within the financial landscape. A dividend is part of a company’s corporate action that sprinkles a positive vibe and growth potential on the shareholders. By opting for stock dividends, a company displays its confidence in its capability to generate future profits and maintain robust financial standing.
The company’s strategic path is to follow dividends, which enable it to attract the attention of long-term investors who view the company as a promising venture and tend to keep these high dividend-yielding shares in their portfolio. Moreover, stock dividends provide an alternative way for ASX companies to give returns to shareholders without burning precious cash resources, allowing them to maintain strong liquidity conditions for operational activities and expansion.
A combination of financial prudence, investor inclination, and strong growth anticipation underscores the importance of stock dividends under the corporate strategic purview.
Let’s look at the few names for ASX dividend that are favorable for investors portfolio are as follows:
Note: The formula of an absolute return is (FV/PV-1)*100, where FV is the final value and PV is the present value.
Super Retail Group Limited (ASX: SUL) has a market cap of $3.54 billion and a current market price of $15.66 as of 20 December 2023. The stock price has moved up approximately 49% in one year (YTD as of 20 December 2023) and recorded an annual dividend yield of 6.68% as of 20 December 2023.
The rise in the dividend payout ratio from 65.6% in FY2022 to 88.4% in FY2023 signals a strategic decision to allocate a larger proportion of its earnings to shareholders as dividends during the most recent fiscal year. This move is likely to appeal to income-focused investors, offering them a more substantial share of the company's profits as regular dividend income. It reflects the company's commitment to shareholder returns and signifies financial stability.
GR Engineering Services Ltd. (ASX: GNG) has a market cap of $382.70 million and a current market price of $2.32 as of 20 December 2023. The stock price has increased by approximately 19% in one year (YTD as of 20 December 2023). The annual dividend yield is 7.98% as of 20 December 2023.
During the fiscal year, the company paid dividends to its shareholders as part of its commitment to delivering returns. They paid a fully franked dividend of 10.0 cents per share on September 20, 2022, and another fully franked dividend of 9.0 cents per share on March 23, 2023. Looking ahead, the company's directors have recommended a further fully franked dividend of 10.0 cents per share to be paid on September 22, 2023, indicating their continued focus on providing value to shareholders through dividends. These dividend distributions are a testament to the company's financial stability and its dedication to rewarding its investors.
Vulcan Steel Limited (ASX: VSL) has a market cap of $988.18 million and a current market price of $7.52 as of 20 December 2023. The stock has an annual dividend yield of 6.52% as of 20 December 2023.
In FY2023, the total dividend is 55.0 NZ cents per share; this represents a payout ratio of 76.1% of Vulcan's net profit after tax before considering significant items. It aligns with the board's established payout range of 60% to 80% of annual earnings before significant items. In summary, the total dividends declared for FY23 amounted to NZ$72.3 million, with NZ$32 million of this sum being distributed as an interim dividend.
Frequently Asked Questions (F.A.Q)
What is an ASX dividend reinvestment plan?
A dividend reinvestment plan offers an exclusive path to increasing the holding stake in the dividend-paying ASX stock. Instead of receiving dividends as cash, shareholders may opt to receive more shares in the company. Some companies will offer a dividend reinvestment price at a discount to market value.
What is the best option for an investor: a dividend or a capital gain?
Total returns are sometimes calculated based on stock appreciation along with dividend gains, which demonstrate a high yield on the net-gain growth of investments. The primary goal of an investor is that their investment should grow at a rate higher than the inflation rate. Established ASX companies with robust earnings pay good dividends and simultaneously provide a better return on equity.
How do I define the payout ratio?
The payout ratio varies from company to company. It is based on the individual company’s policy to distribute returns to shareholders and retain at some proportion.
This is a financial metric that is generally used to determine the sustainability of a company’s dividend policy. The company's prudent management maintains steady profitability and tends to reward shareholders with passive income sources.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.