Your 2025 ASX highest dividend yield stocks playbook

In Part 1 of this two-parter on ASX dividend investing, we covered dividend basics and the key dividend dates, how franking credits work, and we explored the Dividend Stripping strategy.

With half-year (or full year earnings depending on the company) kicking off in just a few weeks, this is the perfect time to put our new dividend expertise to use. In this part, we’ll investigate which ASX stocks offer the highest dividend yields, and therefore may be prime candidates for the Dividend Stripping strategy.

ASX highest dividend yields: Blue-Chips

There are over 2,000 stocks listed on the ASX. Only 426 of these paid a dividend of any amount over the last 12-months. That narrows our search substantially! Of those 426, let’s kick off with the highest yielding ASX dividend stocks you’ve probably already heard of, the Blue-Chips.

The table above shows the 20 highest yielding stocks in the ASX Top 50 based on “grossed-up” dividend yield. Grossed-up dividend yield accounts for any franking credits attached to a company’s dividend, and therefore represents an after-tax yield.

It is important to compare dividends based on grossed-up yields as it is a fairer representation of the true benefit of a company’s dividends (check out Part 1 for a detailed explanation of how franking credits work with respect to the various marginal tax rates). Note also, I have only considered ordinary dividends here. This means I have factored out any special dividends that might have been paid over the last 12 months.

Special dividends are just that – occasional, ad-hoc, irregular. This is perhaps a contentious item as it could be argued some companies tend to pay special dividends more often than others. Still, I feel excluding them is the most consistent approach, as well as being more indicative of what to expect under typical circumstances.

Note also, each of the companies in the above table have been vetted for having not missed a dividend in the last 3-years (one can’t go back too far on this metric because of the COVID-19 pandemic during which many companies justifiably paused their dividends).

As always with any of the data I will show you in this article, it is important to remember that history is no predictor of the future. There are no guarantees that a fantastic historical dividend will be maintained. I suggest, however, it isn’t a huge leap of faith to assume the household names in the above table will continue to deliver decent dividends over the next 12-months.

Looking at the Top 20 Blue-chip dividend stocks, it’s no surprise to see three of the Big 4 banks in ANZ Group (ASX: ANZ), National Australia Bank (ASX: NAB), and Westpac Banking Corp. (ASX: WBC). Our big banks have for nearly two generations provided Aussie investors with strong and reliable dividends – in most cases fully franked.

I do note, though, that Commonwealth Bank of Australia (ASX: CBA) did not make the above list. CBA’s 4.1% p.a. grossed-up dividend yield, although commendable, simply didn’t make the cut!

The rest of the list is made up largely of big insurance companies, real estate investment trusts (REITs), and our major resources heavyweights. Note also, defensive sectors like utilities (APA Group (ASX: APA) and Origin Energy (ASX: ORG)) and infrastructure (Telstra Corporation (ASX: TLS) and Transurban Group (ASX: TCL)) feature.

Stocks focussed on consumer staples areas, like Amcor (ASX: AMC), Woolworths (ASX: WOW), Treasury Wine Estates (ASX: TWE) and The Lottery Corporation (ASX: TLC) round out the highest dividend Blue-Chips list.

ASX highest dividend yields: Mid-Caps

On to the Mid-Caps now, i.e., stocks outside of the ASX Top 50 that have a market capitalisation greater than $1 billion.

As we can see, as we move down the capitalisation scale, we appear to move up the grossed-up dividend yield scale. One could interpret this as a classic risk versus reward scenario. Investors typically pay less for shares in companies that are less well-established or that have lower earnings visibility or certainty. These factors tend to be more closely related to smaller companies as we move down the capitalisation scale.

This is a generalisation, because size doesn’t always equal strong and reliable earnings growth, and therefore the potential for a high dividend yield. There are many quality companies in this list, and reliable dividend payers too. As always, it is up to the individual to weigh each company’s fundamentals – regardless of its size – to ascertain which is more likely to pay them a strong and reliable dividend yield.

Again, I have vetted each company in this list to exclude those that did not pay a dividend in each of the three most recent fiscal years.

In summary, there is a smorgasbord of potential opportunities for Aussie dividend investors in this list. For this reason, I’ve gone Top 40 here. Grossed up yields start at 8.3% and extend well into double digits.

Keep in mind, however, that a billion dollar-plus market capitalisation and three fiscal years of dividend payments doesn’t automatically qualify as a sound investment. I have deliberately chosen to keep this sweep as broad as possible to create a large universe of opportunity for you to conduct further homework on.

Can I suggest for starters, you also run the following filters over each and every stock identified in this article:

• At least stable, but preferably growing dividends per share (DPS) over the last 3-years
• At least stable, but preferably growing earnings per share (EPS) over the last 3-years
• At least stable, but preferably a strongly rising share price over the last 6-12 months.

As a trend following technical analyst, you can imagine which of the above criteria I hold most important! 📈✅

ASX highest dividend yields: Small-Caps

Finally, the Small-Caps. These are stocks with market capitalisations below $1 billion, but I chose to exclude those with market capitalisations below $50 million. I suggest we’re just getting too small, potentially illiquid, and potentially variable in terms of earnings reliability down there.

I’ve gone Top 50 here, as it coincidentally matched up with the starting grossed-up yield of the Top 40 Mid-Caps of 8.3%.

I should remind you about the risk-reward equation here, particularly for those who have already forgotten about the now-seemingly paltry yields on offer from the Blue-Chips!

Happy dividend hunting (or stripping if you prefer!)

When I set out on this task of identifying the highest yielding ASX dividend stocks, I figured it would be a fairly straightforward exercise. Run some scans, show you some tables of the highest yields.

It turned out to be far more difficult than I expected, particularly due to the fact that information on dividends, franking credits, and next ex-dividend dates cannot be found in an easily accessible and searchable database from any single provider (hey – if you know of one – please let me know for next time!).

It took hours of meticulous cross checking across several databases to collate this information. I trust you will find it useful. But I will conclude by saying the work I’ve done here, even though substantially exhaustive – is just a stepping off point for your own continued research.

I’ve been investing for over 30-years, and I know from painful experience that simply buying the top half-dozen or dozen stocks in of one of the above tables, sitting back, and watching the dividend zillions roll in – is both simplistic and foolhardy. I propose that I've created for you here a usefully narrowed universe of opportunity, but now the hard work is over to you!

This article first appeared on Market Index on 10 January 2024.