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There's no single share that's best for all investors as all our needs are different - and what's best for you might not be best for someone else. No-one can say for certain which direction stocks will go; these are investment ideas only and should not be taken as financial advice.
The major banks have traditionally been a safe bet when it comes to reliable dividend stocks, so with CBA, NAB, ANZ and Westpac required by banking regulator APRA to cap dividend payments, Aussie income investors will be keeping an eye out for alternative options.
Dividends are one of the most important considerations for Australian investors. Well-established blue-chip companies like the banks are less likely to see substantial price growth over many years, so dividends are often seen as the key reason to invest in them.
But during a recession or crisis like COVID-19, many of these companies cut dividends to shore up capital, leaving those that rely on them scrambling. So we decided to find a list of non-bank stocks that analysts think might continue paying dividends through 2020/21.
As you'll know, there's no "best stock". A stock that's great for one person could be a bad pick for you, so there are different ways to approach dividend stocks.
While dividend yield or dividend per share are key factors in stock picking, there's no saying whether the next five years will deliver the same results (or better or worse!).
Instead, Bell Direct's market analyst Jessica Amir said investors should note three key features when hunting for quality dividend stocks in 2020:
Amir also advised investors not to get lured into "dividend traps" by assuming the same well-known dividend companies are the best value in 2020/21.
"Most successful investors and investment professionals stay nimble and reevaluate their holdings as the economy changes," said Amir.
"So if you are looking for dividends, be mindful that the big four banks' dividends will fall this year and remain uncertain after that, following the directive from APRA, combined with the largely uncertain economic environment."
Did you know you can save $1,046 in brokerage fees every year on average by switching to a cheaper share trading platform? Check out fees and features in our comparison table to find a better deal today.
Below is a list of dividend stocks sourced using Bell Direct's Strategy Builder tool. Bell Direct's market analyst Jessica Amir filtered for quality stocks that have repeatedly high earnings and low debt levels which might indicate continued or increased dividend payments in the future. Although the stocks were selected in March 2020, the financial information has since been updated.
These are not recommendations, they are intended as investment ideas only.
Note: All below data is as of 7 December 2020.
Debt to equity ratio: Compares a company's level of debt to its amount of shareholder equity. Generally speaking, the higher the ratio, the more leveraged a company is, although this ratio will differ broadly across sectors.
Price-earnings ratio: The relative value of a company's stock price to its recent profit results, i.e. the price investors are paying for every dollar of profit the company makes. A high P/E ratio might indicate investors expect growth to occur in the future and are willing to pay more for it, or it can also indicate the stock is overpriced.
Schaffer Corp is a small-cap industrials company that produces building materials and automobile leather and interiors. In the last two decades, its share price has risen by more than 300%.
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To buy shares you'll need to find a broker. You can use the table below to compare online brokers (also known as share trading platforms) available in Australia.
Important: Share trading can be financially risky and the value of your investment can go down as well as up. “Standard brokerage” fee is the cost to trade $1,000 or less of ASX-listed shares and ETFs without any qualifications or special eligibility. If ASX shares aren’t available, the fee shown is for US shares. Where both CHESS sponsored and custodian shares are offered, we display the cheapest option.
Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, options or any specific provider, service or offering. It should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involve substantial risk of loss and therefore are not appropriate for all investors. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.
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