The Best ASX Dividend Stocks to Watch

BHP Group

BHP Group is the largest company in Australia and the largest mining company in the world by market capitalisation.

Although BHP has a long history of consistently returning cash to shareholders in the form of dividends, the amount it pays can vary from one year to the next as its dividend policy means that distributions are linked to performance.

Mining is a cyclical industry. When commodity prices are high, miners generate more revenue, with the opposite also being true. BHP’s policy on dividends is to maintain a minimum 50% payout of underlying attributable profit at every reporting period. Consequently, BHP’s dividends can fluctuate depending on how the company performs.

BHP produces a number of commodities including iron ore, copper and coal. Despite being a well-diversified miner, iron ore is responsible for the largest chunk of BHP’s revenue, accounting for almost 50% in the year ended 30 June 2023.

At the turn of the year, iron ore prices are at high levels historically, having risen more than 20% in the last five months of 2023. Despite a dip at the start of the year, some analysts are predicting that the iron ore sector will continue to perform strongly in 2024.

If iron ore prices remain at high levels, this is likely to be reflected in BHP’s performance this year which, in turn, could translate to a decent dividend. Of course, on the other hand, if iron ore prices fall, this is likely to translate into a poor performance for BHP. At the time of writing, the miner has a 12-month trailing dividend yield of 5.48%.

ANZ Group Holdings

The Australia and New Zealand Banking Group (ANZ) is one of the biggest bank stocks in Australia and is another of the ASX dividend stocks to watch in 2024.

As competition heats up amongst Australian banks for both deposits and home loans, ANZ’s institutional banking division, which is larger than that of its competitors, could give it an edge in 2024 and allow it to continue its impressive, long track record of paying dividends.

Although ANZ has a long history of paying dividends, in the wake of the Covid-19 pandemic in 2020, dividends were slashed considerably. Nevertheless, dividends have increased in each of the following three years and, at the time of writing, the shares have a dividend yield of 6.76%.

APA Group

APA Group owns and operates natural gas and electricity assets throughout Australia, including pipelines which transports around a half of the country’s natural gas.

Regardless of what is happening in the wider economy, people need energy, and this means that companies such as APA Group, who provide energy infrastructure, tend to be able to rely on consistent revenue.

This kind of steady revenue is often something that dividend investors seek when choosing stocks, as it can translate into reliable dividend payments. Indeed, APA Group has increased its annual dividend every year more than 20 years, and currently has an impressive dividend yield of 6.62%.

However, it should be noted that this high yield is partly due to a poor share price performance in the second half of 2023.

Suncorp Group

Suncorp Group is a leading Australian insurance company, which is another industry that tends to perform consistently throughout all stages of the economic cycle. Simply put, if people need insurance, they will tend to pay for it, regardless of the prevailing economic conditions.

Furthermore, insurance companies could stand to benefit from the current high interest rate environment, as they are able to earn more income from the large percentage of “safe” debt which they are obliged to hold in order to back their policies.

As with the other Australian dividend stocks on this list, Suncorp Group has a long history of paying dividends to shareholders and, currently, has a dividend yield of 4.38%.

Telstra Corporation

Telstra is the largest telecommunication company in Australia, operating in a number of segments, including providing mobile and internet services for both households and businesses.

This is another ASX dividend stock which operates in a defensive industry. In an economic downturn, neither households nor businesses are likely to cancel internet plans unless they are compelled to. Other, less essential, goods and services are likely to bear the consequences of cost cutting beforehand.

Subsequently, Telstra should be able to rely on fairly consistent income, something which was evident during the Covid-19 pandemic. Whilst share price has been somewhat volatile over the years, Telstra has a long history of paying dividends to shareholders, and currently has a dividend yield of 4.27%.