Hunting for the Highest Dividend Stocks? Your Guide to ASX's Best Performers

The Australian Securities Exchange (ASX) is home to some impressive dividend-paying companies that deserve your attention. As of early 2023, the market was projected to deliver an average dividend yield around 4%, but several standout names are pulling in significantly higher returns. If you’re looking to build a steady income stream through investments, understanding where to find the highest dividend stocks on the ASX is a smart starting point.

Why Dividend Stocks Matter: The Real Advantages

Before diving into the numbers, let’s explore why serious investors gravitate toward dividend-paying stocks in the first place.

They Signal Company Strength

Here’s the thing: companies that consistently pay dividends are typically well-established, profitable, and generating solid earnings. This stability speaks volumes. Historical data from 1927 to 2014 shows that dividend-paying stocks in major indices actually outperformed their non-paying counterparts. Dividend payers averaged 10.4% annual returns compared to just 8.5% for non-payers, while also displaying lower volatility (18% standard deviation). In other words, you get better returns with less rollercoaster action.

Reinvestment Amplifies Your Returns

One often-overlooked perk is the Dividend Reinvestment Plan (DRP). Instead of pocketing your dividend payments in cash, you can funnel them back into buying more shares of the same stock. Most DRPs charge zero transaction fees, which means your returns compound without eating into your profits through unnecessary costs.

Protection When Markets Wobble

Growth stocks live and die by optimistic future expectations, making them vulnerable during downturns. Dividend stocks, by contrast, are usually issued by established, financially sound companies with proven earning track records. During market turbulence, these stocks tend to hold their value better, offering a safety net when the broader market shakes. As the legendary investor once noted: “If you don’t make money while you sleep, you will work until you die.” Dividend income lets you do exactly that.

The ASX’s Top Dividend Payers: What’s Really Performing

The highest dividend stocks on the ASX aren’t random. They’re ranked based on multiple factors: current yield percentage, historical dividend growth, payout ratios, and company fundamentals. Investors use these rankings to identify stocks with consistent dividend histories and strong potential to keep paying.

As of April 2023, here’s a snapshot of standout performers:

Top Tier (15%+ Yields):

• Terracom Ltd: 42.64% yield, 128.13% one-year return
• Yancoal Australia Ltd: 22.34% yield, 79.69% one-year return
• Coronado Global Resources Inc: 20.95% yield, +28.20% one-year return
• New Hope Corporation: 16.54% yield, 105.53% one-year return

Solid Performers (10-15% Yields):

• Regal Investment Fund: 15.86% yield
• Grange Resources Ltd: 11.65% yield
• Smartgroup Corporation Ltd: 11.60% yield
• BSP Financial Group Ltd: 11.01% yield

Established Names (8-10% Yields):

• BHP Group Ltd: 8.83% yield
• Ampol Ltd: 8.86% yield
• Fortescue Metals Group: 9.40% yield

The 10 Stocks Worth Watching

Coal & Resources Leaders

Terracom Ltd (TER) stands out as one of the highest dividend stocks currently trading on the ASX. With a 42.64% dividend yield and 33.27% gross yield, it’s generating serious income for shareholders. The strong 1-year return of 128.13% shows the company is not just paying high dividends—it’s also appreciating in value.

Yancoal Australia Ltd (YAL), a coal mining operator, offers 21.08% dividend yield without a DRP, making it appealing for those who want direct income payouts. Its 79.69% annual return demonstrates solid market performance.

Coronado Global Resources Inc (CRN) operates coal mines across the US and Australia, delivering 20.95% yield. The 28.20% one-year gain suggests the market views the company positively.

Diversified & Emerging Opportunities

New Hope Corporation Ltd (NHC) isn’t just a coal miner—it spans exploration, ports, oil, and agriculture. Its 16.54% yield and 105.53% annual return make it one of the more dynamic highest dividend stocks on the exchange.

Tabcorp Holdings Ltd (TAH), a gambling and entertainment leader, provides 13.07% yield with a DRP option. Its stable 3.13% annual return reflects consistent, less-volatile performance—ideal for conservative income seekers.

Regal Investment Fund (RFI) takes a different approach, investing in Australian and global shares while delivering 15.86% yield. The DRP feature lets investors compound their returns automatically.

Mining & Industrial Picks

Grange Resources Ltd (GRR) focuses on high-quality iron ore production with an 11.65% yield. Although lacking a DRP, the company has proven its commitment to consistent dividend payments.

Smartgroup Corporation Ltd (SIQ), an employee benefits manager, offers 11.60% yield. With a 66-cent-per-share trailing dividend over 12 months, it demonstrates reliable payout discipline.

Zimplats Holdings Ltd (ZIM), a platinum miner, currently yields 11.07% with an 18.21% annual return, positioning investors to benefit from precious metal demand.

BSP Financial Group Ltd (BFL), Papua New Guinea’s largest financial institution, yields 11.01% with solid 7.61% annual gains despite regional market challenges.

Selecting Your Winners: What Really Matters

Chasing yield alone is a rookie mistake. Here’s what separates smart investors from the rest:

Dividend Yield Calculation: This is annual dividend divided by share price. Higher doesn’t always mean better—context matters.

Payout Ratio: This shows what percentage of earnings the company distributes. A lower ratio signals the company is retaining cash for growth and has room to raise dividends without strain.

Dividend Growth Trend: Look for companies increasing their payouts over time, not just maintaining them. Consistent growth signals management confidence.

Financial Health: Analyze revenue growth, profitability margins, and debt levels. A high-yielding stock is worthless if the company can’t actually afford to keep paying.

Industry Headwinds: Watch for regulatory changes or technological shifts that could threaten future payouts. Resources stocks face commodity price swings; telecoms face technology disruption.

The Bottom Line

The ASX offers genuine opportunities for income-focused investors willing to do their homework. The highest dividend stocks can generate meaningful passive income, but they often come with additional risk—which is why diversification and due diligence aren’t optional.

Before buying any stock, understand why its yield is elevated. Is it because the stock price dropped (potential value play) or because the company is truly distributing more earnings (sustainable growth)? Research the fundamentals, track management’s track record, and consider the industry outlook. The companies listed here have strong dividend histories, but past performance never guarantees future results.

The real secret to successful dividend investing isn’t finding the next 50% yield—it’s finding stable, predictable income from companies that can actually deliver it year after year.