In today's ultra-low interest rate environment, ASX dividend stocks are catching the eye of income-seeking investors. On Tuesday, the Reserve Bank of Australia (RBA) reaffirmed its commitment to maintaining the official cash rate at a historic low of 0.10%. This decision suggests that higher returns from cash held in savings deposits are unlikely to materialize anytime soon.
Current term deposit rates barely exceed 1%, meaning that after accounting for inflation, the purchasing power of your money is likely to decrease over time. For those seeking regular income and willing to accept more risk than sticking their money in a bank, ASX dividend shares offer a potentially lucrative alternative. These shares promise not only inflation-beating yields but also potential capital gains.
A Few Words of Caution for Yield Investors
Before diving into the top-yielding ASX dividend shares, it's important to proceed with caution. Not all high-yielding shares are created equal. A high trailing dividend yield might result from a significant drop in the share price, which warrants further investigation into the reasons behind the decline and the future outlook of the company.
Remember, there's no guarantee that a company will maintain its current dividend payout ratio, especially if its share price has been under pressure. It's more prudent to focus on expected future yields rather than past yields. Additionally, any dividends paid to shareholders are funds that the company cannot reinvest into its business.
The Top 10 Yielding ASX Dividend Shares
With these considerations in mind, let's explore the 10 top-yielding ASX dividend shares among the 50 largest ASX companies, based on data from Iress as reported by The Australian.
1. Fortescue (ASX:FMG) Metals Group Limited (ASX: FMG)
- Dividend Yield: 10.8%, fully franked
- Market Cap: $72.2 billion
- Share Price Performance (12 months): +57%
2. AGL Energy (ASX:AGL) Limited (ASX: AGL)
- Dividend Yield: 10.2%, unfranked
- Market Cap: $5.4 billion
- Share Price Performance (12 months): -50%
3. Aurizon Holdings Ltd (ASX: AZJ)
- Dividend Yield: 7.8%, 70% franked
- Market Cap: $6.8 billion
- Share Price Performance (12 months): -24%
4. Origin Energy Ltd (ASX: ORG)
- Dividend Yield: 5.6%, unfranked
- Market Cap: $7.9 billion
- Share Price Performance (12 months): -25%
5. APA Group (ASX: APA)
- Dividend Yield: 5.5%, unfranked
- Market Cap: $11 billion
- Share Price Performance (12 months): -20%
6. DEXUS Property Group (ASX: DXS)
- Dividend Yield: 5%, unfranked
- Market Cap: $11.2 billion
- Share Price Performance (12 months): +10%
7. Rio Tinto (ASX:RIO) Limited (ASX: RIO)
- Dividend Yield: 4.9%, fully franked
- Market Cap: $47.2 billion
- Share Price Performance (12 months): +25%
8. GPT Group (ASX: GPT)
- Dividend Yield: 4.9%, unfranked
- Market Cap: $9.1 billion
- Share Price Performance (12 months): +12%
9. Stockland Corporation Ltd (ASX: SGP)
- Dividend Yield: 4.7%, unfranked
- Market Cap: $11.5 billion
- Share Price Performance (12 months): +23%
10. Australia and New Zealand Banking Group Ltd (ASX: ANZ)
- Dividend Yield: 4.6%, fully franked
- Market Cap: $81.9 billion
- Share Price Performance (12 months): +51%
Conclusion
While the low-interest-rate environment makes dividend shares an attractive option for income-seeking investors, it is crucial to approach with caution. Evaluating the reasons behind high yields and the sustainability of dividend payouts is essential. For those willing to accept the inherent risks, these top-yielding ASX dividend shares offer a compelling opportunity for regular income and potential capital appreciation.