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Top 5 ASX Dividend Stocks in 2022
ASX dividend stocks offer investors the opportunity to generate returns even when uncertainty pervades the markets.
Even in times of economic uncertainty, Australia’s economy has remained resilient given its prime location in close proximity to Asia, as well as its abundant wealth of mineral resources.
Heading into 2023, the International Monetary Fund projects sees that trend continuing — the financial agency predicts that Australia will become the world’s 12th largest economy next year with a GDP of around AU$2.5 trillion.
Investors interested in earning passive income while growing their holdings may want to consider ASX-listed dividend stocks.
“Investors are closely looking at their portfolios as inflation and changing economic conditions appear to be key risks going into FY23,” according to Stake, an Australia-based online broker that allows trading on the Australian and US markets. “One of the ways to generate returns in Australia is by looking for stocks that pay out dividends, fortunately there are plenty of them.”
Dividend stocks reward investors with regular payouts, allowing them to share in company revenues. Although they tend to offer stability, as with most investments, dividend stocks are not without risk.
Investors can mitigate risk by choosing long-term dividend stocks called "dividend aristocrats," which often offer the best value. Their reputation for delivering healthy returns and consistent dividend payments gives them a safer investment profile over the rest of the dividend stocks on the market. Companies that can consistently pay out dividends to shareholders are often the same companies that continue pumping out profits, even with increasing market volatility.
Stake’s list of the top 10 long-term dividend stocks on the ASX mainly features companies in the resource sector, particularly iron ore and coal. Other prominent sectors include banking, retail and telecommunications.
Here the Investing News Network offers investors a list of the five top ASX dividend stocks on Stake’s list based on dividend yield. Investors consider dividend yield to be a key metric for appraising a stock’s value. The ASX stocks on the list below have strong dividend yields of greater than 8 percent, with data current as of November 22, 2022.
1. Fortescue Metals
Market cap: AU$59.12 billion; dividend yield: 15.47 percent
Western Australia’s Fortescue Metals (ASX:FMG,OTCQX:FSUMF) is one of the world's biggest iron ore producers. The mining giant has multiple operations in the Pilbara region and its products are sold globally, but mainly to China.
Fortescue Chairman Andrew Forrest has committed the company to reaching zero carbon emissions by 2030. As part of this green initiative, in early 2022 the company bought Williams Advanced Engineering and announced the world’s very first zero-emissions infinity train, which will be able to use electric power to bring ore to port.
However, Stake reports that there are concerns that the company’s several-billion-dollar green plan may impact its ability to continue paying out strong dividends. A number of analysts have downgraded their payout forecasts for Fortescue for that reason.
2. BHP
Market cap: AU$220.26 billion; dividend yield: 10.65 percent
Stake calls BHP (ASX:BHP,NYSE:BHP,LSE:BHP) “one of the best long term stocks to watch on the ASX.”
Along with copper, potash, coal and nickel, the Melbourne-based multinational company is best known for mining iron ore in Australia. BHP has six iron ore mining projects in the resource-rich Pilbara region of Western Australia. The firm is also the biggest iron ore producer by market cap on the ASX.
BHP’s record payouts to shareholders in 2022 were tied to its increased revenue, alongside rising iron ore prices in 2021. Will BHP continue to put up high dividend yields? Investors should watch the iron ore market when considering this ASX dividend stock.
3. Rio Tinto
Market cap: US$160.08 billion; dividend yield: 9.15 percent
Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO) is another iron ore miner posting record dividend payouts for its investors. The company’s portfolio is heavily weighted in high-quality iron ore projects in Australia, and its products are highly sought after by customers in East Asia and Southern China. In 2022, Rio Tinto, in partnership with NASA, opened its most technologically advanced mine, the AU$2.6 billion Gudai-Darri iron ore project, which includes autonomous transportation and drilling systems.
Investors taking a stake in Rio Tinto should pay attention to supply and demand factors in the iron ore market. “(T)he company is in a strong position to leverage itself to higher iron ore prices,” according to Stake.
4. Harvey Norman Holdings
Market cap: AU$5.17 billion; dividend yield: 9.04 percent
Harvey Norman Holdings (ASX:HVN,OTC Pink:HNORF) is an Australian multinational retail giant that sells furniture, appliances and consumer electronics. Stake describes the stock as “an investor darling for those seeking passive income from dividends.”
Like most retailers, the COVID-19 pandemic took a toll on Harvey Norman, but Stake reports the company’s “international business is growing.” Its retail stores outside of Australia accounted for a quarter of its pre-tax profits in its latest annual report.
5. New Hope
Market cap: US$5.07 billion; dividend yield: 8.32 percent
New Hope (ASX:NHC,OTC Pink:NHPEF) is involved in all stages of the coal industry, from exploration and development to production and processing. The company owns interests in two open-cut coal mines in Queensland and New South Wales, and is also involved in the agriculture and oil and gas sectors.
Russia’s war in Ukraine has pushed many European nations to turn the dial up on coal usage to meet rising energy needs. This translated into a big year in revenues for New Hope as coal prices increased.
Don't forget to follow us @INN_Australia for real-time updates!
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
- 5 Top Australian Stocks in Mining ›
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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Melissa Pistilli has been reporting on the markets and educating investors since 2006. She has covered a wide variety of industries in the investment space including mining, cannabis, tech and pharmaceuticals. She helps to educate investors about opportunities in a variety of growth markets. Melissa holds a bachelor's degree in English education as well as a master's degree in the teaching of writing, both from Humboldt State University, California.
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