High Yield Stocks - July 2019
High Yield Stocks - July 2019

Topic

This report scans the ASX200 universe for high yielding stocks, and identifies companies that are at risk of dividend cuts by assessing a combination of factors including price stability, earnings revisions, free cash flow and payout ratios. Dividend yields are based on a rolling 12 month forecast.

The below is a preview from our High Yield Stocks research report. To view this report in full visit the Patersons Client Portal.

 

Dividend Model Update

Top Sustainable Dividend Stocks

The highest yielding ASX200 stocks, excluding Infrastructure & REITs, as rated by our models as sustainable are:

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With global and Australian interest rates at historical lows, the ability to identify companies with sustainable dividend yields will be crucial for income investors in the short to medium term. Combined with global growth concerns, low interest rates mean a sustainable dividend paying, high quality company should be a key component for an income portfolio.

The historic grossed up dividend yield of the ASX200 industrials has remained fairly consistent at ~5.5% over the past eight years while 12-month term deposits have fallen from 6% to just above 2% over the same period.

The Australian infrastructure and listed property companies have performed well over the past year as bond yields have fallen.

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There is strong evidence to suggest traders can capture alpha (excess returns) if they buy sustainable fully franked high yielding stocks 30-40 trading days before the company goes ex-dividend. Income investors will begin to focus their attention on the upcoming June year end reporting season.

Upcoming high yield cum-div ASX200 stocks are highlighted below.
 
Code Company PE (x) Dividend
Yield (%)
Franked
(%)
Approx Ex-
Div Date
RIO Rio Tinto Limited 12.0 5.2 100 9 Aug
SCG Scentre Grp 15.4 5.7 14 14 Aug
CBA Commonwealth Bank 15.8 5.3 100 15 Aug
SUN Suncorp Group Ltd 14.6 5.2 100 15 Aug
TAH TABCORP Holdings Ltd 21.5 4.8 100 15 Aug
GUD G.U.D Holdings 13.5 5.2 100 16 Aug
WES Wesfarmers Limited 21.3 4.8 100 20 Aug
IAG Insurance Australia 19.6 4.0 100 21 Aug
AGL AGL Energy Limited 14.8 5.6 80 22 Aug
JBH JB Hi-Fi Limited 12.2 5.3 100 23 Aug
QBE QBE Insurance Group 12.2 4.9 45 23 Aug
WPL Woodside Petroleum 14.3 5.6 100 23 Aug
AZJ Aurizon Holdings Ltd 21.6 4.0 65 27 Aug
CCL Coca-Cola Amatil 19.8 4.4 58 27 Aug

Each month we run a stress test based on four factors to find companies that are most at risk of a dividend cut for the coming year. ASX200 stocks most at risk are highlighted below:

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Warning: This report is intended to provide general securities advice, and does not purport to make any recommendation that any securities transaction is appropriate to your particular investment objectives, financial situation or particular needs. Prior to making any investment decision, you should assess, or seek advice from your Adviser, on whether any relevant part of this report is appropriate to your financial circumstances and investment objectives.