A peek into 10 best dividend paying stocks on ASX

Highlights:

• Dividend investing attracts investors as it can be a lucrative source of passive income.
• These stocks provide a hedge against inflation.
• MFG, FMG, RIO, BHP, NHC, and PDL are a few stocks with over 10% dividend yield.

Dividend investing attracts investors as it can be a lucrative source of passive income, and they hedge against inflation on investment returns. Dividend stocks are a useful income source. However, the best dividend stocks can help investors to increase their wealth over the long term.

Currently, inflation is a common topic of discussion amongst market participants. In a scenario where the inflation rate is eating the purchasing power of the investors, many investors prefer selecting stocks with high dividend yields. These stocks help investors to offset the impact of inflation. A carefully selected dividend stock can provide a hedge against inflation by generating an increase in income while also appreciating in value.

In this article, we will look into some of the top dividend-paying stocks with high dividend yields.

Magellan Financial Group Ltd (ASX: MFG)

Magellan Financial Group is a specialist funds management business established in 2006. As at 30 June 2022, MFG’s total funds under management was A$61.3 million. MFG was listed on 01 July 2004 and has provided dividends consistently since 2012.

In 1H FY2022, the Company reported a 15% growth in the net profit before tax to A$293.4 million. Adjusted NPAT increased 16% to A$248.1 million, driven by a 12% rise in average funds under management.

Magellan has a strong balance sheet with no debt and net tangible assets of A$992.8 million, solid margins, and operating cash flows.

Fortescue Metals Group Ltd (ASX: FMG)

Established in 2003, Fortescue Metals Group Ltd is a vertically integrated green energy and resources group, including green energy solutions to the mining, processing, and transporting of iron ore for export from FMG’s deposits within the Pilbara region of WA.

Revenue from ordinary activities decreased 13% to US$8,125 million and NPAT by 32% to US$2,777 million. FMG has provided dividends consistently since 2012.

In Q3 FY2022, the Company reported a record Q3 operating performance, which supported the strong result during the quarter. The robust performance during the quarter was supported by the successful delivery and ramp-up of the Eliwana project and execution of its integrated operations and marketing strategy, resulting in the upgrade of the FY2022 shipment guidance to 185 mt – 188 mt.

Rio Tinto Ltd (ASX: RIO)

Rio Tinto produces copper, gold, iron ore, coal, aluminium, borates, titanium dioxide, and other minerals and metals. In FY2021, the Company reported a 60% growth in net cash from operating activities to US$25,345 million. Profit after tax increased 116% to US$21,094 million and underlying EPS by 72% to US 1,321 cents. RIO has consistently provided dividends since 2012.

During the March 2022 quarter, the Company made notable development with the beginning of underground mining at  Oyu Tolgoi after a complete agreement was reached with the Government of Mongolia. RIO also completed the acquisition of the Rincon lithium project in Argentina. It also signed a framework contract at the Simandou iron ore project in Guinea.

BHP Group Ltd (ASX: BHP)

BHP Group Ltd is in the business of mineral exploration, production, and processing, especially coal, iron, copper, and manganese ore. BHP is also engaged in hydrocarbon exploration, production, and refining.

In 1H FY2021, the Company reported a 32% growth in the total revenue to US$33.784 million and a 108% growth in profit after tax from continuing operations to US$8,471 million. The Company announced a record dividend of US$1.50 per share.

New Hope Corporation Ltd (ASX: NHC)

New Hope Group is a majority Australian-owned and operated diversified energy company operating for over 60 years. The Company has consistently provided dividends since 2012. It provided an interim dividend for FY2022 of AU$0.300.

In 1H FY2022, NHC noted a 152.9% growth in its revenue to AU$1,025.561 million compared to the previous corresponding period. Its net profit increased ~697% to AU$330.357 million.

Pendal Group Ltd (ASX: PDL)

Leading independent global investment manager, Pendal Group Limited delivered strong growth in underlying EPS, revenue, and underlying profit for the six months ending 31 March 2022.

Revenue in 1H FY2022 increased 31% to A$362.6 million. Underlying profit after tax increased 59% to A$82.6 million and underlying EPS by 34% to 25.5 cents per share. PDL was listed on 10 December 2007 and has a history of providing dividends since 2012.

The results were reinforced by a full six-month contribution from US-based investment manager Thompson, Siegel & Walmsley acquired by Pendal in 2H FY2021.

CSR Ltd (ASX: CSR)

CSR Ltd is the leading building products company in Australia and New Zealand. It is the name behind some of the most trusted and recognised brands in providing building products for residential and commercial construction. Since 2012, CSR has constantly provided dividends.

In FY2022, the Company made a net profit of A$193 million, up 20% from the previous year. The trading revenue increased 9% to A$2.3 billion with an EBIT of A$291 million, up 22% compared to the previous corresponding period. The Company declared the final dividend of AU 18.0 cents per share. This brings a full-year dividend of 31.5 cents per share.

Recently, the Company announced that it would begin an on-market share buyback of up to A$100 million.

Woodside Energy Group Ltd (ASX: WDS)

Established in 1954, Woodside Energy Group Ltd is a global energy company that aims to thrive through the global energy transition with a low-cost, lower-carbon, profitable, resilient, and diversified portfolio. WDS has constantly provided dividends since 2013.

In FY2021, the Company reported a net profit of US$1,983 million. Production was 91.1 MMboe, and operating cash flow was A$3,792 million. The Company ended FY2021 in a strong financial position. Its underlying full-year profit was A$1,620 million and free cash flow of A$851 million, driven by consistent operational performance, an improved product price environment, and proactive decisions to manage the sales portfolio.

On 01 June 2022, Woodside Energy Group Ltd and BHP Group Limited completed the merger of Woodside with BHP’s oil and gas portfolio to create a global energy company.

Alumina Ltd (ASX: AWC)

Alumina Ltd is the leading Australian Company on ASX and trades on the OTC market in the US. Alumina Limited is the 40% partner in the AWAC joint venture, whose assets include globally leading bauxite mines and alumina refineries in Australia, Brazil, Spain, Saudi Arabia, and Guinea. The Company has provided dividends since 2015.

In FY2021 (period ended 31 December 2021), the Company made a net profit of US$187.6 million, which was US$401.6 million. It declared a final dividend of 29 US cents per share. In FY2021, the Company noted record bauxite and alumina production.

The Company pointed out that the primary aluminium demand slipped over the 1H 2020 due to the pandemic. However, in 2H 2020, the demand recovered with government stimulus support. Prices for aluminium as well as alumina recovered from COVID-induced lows and have stabilised.

South32 Ltd (ASX: S32)

South32 is a globally diversified mining and metals company that produces commodities including bauxite, alumina, aluminium, copper, silver, lead, zinc, nickel, metallurgical coal, and manganese via its operations in Australia, Southern Africa, and South America. The Company was listed on 18 May 2015, and since September 2016, it has consistently provided dividends.

In 1H FY2022, the Company noted a 32% growth in its underlying revenue to US$4,602 million. The net profit increased significantly by 1,847% to US$1,032 million. The Company achieved a record operating margin of 44% and a significant growth in its underlying earnings to US$1.00 billion. Several operations of the Company delivered strong production results. Further, it achieved record quarterly production at Brazil Alumina and South Africa Manganese.

On 12 July 2022, S32 announced that it signed a binding agreement for the sale of a package of four non-core base metals royalties to Anglo Pacific Group Plc (listed on LSE) for US$185 million.

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