Dividend investing continues to be a popular strategy among Australian investors, particularly those looking for a reliable income stream and steady wealth accumulation. As 2025 unfolds, high-yielding dividend stocks on the ASX remain a cornerstone of many portfolios.
This guide explores what dividend stocks are, how to select the best options, and which companies stand out in the current market.
Firstly, what are dividend stocks and why should I invest in them?
Dividend stocks are shares of companies that regularly distribute a portion of their profits to shareholders, often in the form of cash payments. These payouts offer a steady source of passive income, making dividend stocks an attractive option for investors seeking stability.
Investing in dividend-paying companies can be particularly beneficial in lower interest rate environments or for those nearing retirement. Moreover, companies with a strong history of dividend payments are often financially healthy and well-managed.
How to choose the best high dividend stocks on the ASX
Selecting high-quality dividend stocks requires evaluating multiple factors:
- Dividend yield – Calculated as (Annual Dividend / Share Price). While a higher yield is appealing, extremely high dividends may indicate company distress.
- Payout ratio – Shows how much of the company’s earnings are paid out as dividends. A sustainable payout ratio typically falls between 60–80%.
- Franking credits – Fully or partially franked dividends provide tax benefits by passing on credits for corporate tax already paid.
- Financial strength – Look for companies with solid balance sheets, strong cash flows, and manageable debt levels.
- Dividend history – Prioritize companies with a track record of consistent and growing dividend payments over time.
These are 5 High Dividend ASX Stocks to Watch in 2025
1. Commonwealth Bank of Australia (ASX: CBA)
Industry sector: Financials
Dividend yield: ~5.1%
Dividend payout frequency: Bi-annual
Franking credits available: 100% franked
Australia’s largest bank by market cap, CBA offers strong dividend consistency and capital strength, supported by robust mortgage lending and a digital strategy.
What are the benefits?
- Strong capital position
- Consistent dividend history
- Fully franked dividends
What are the drawbacks?
- Sensitive to regulatory and economic changes
- Limited growth during economic downturns
Source: https://www.commbank.com.au/about-us/investors.html
2. BHP Group Ltd (ASX: BHP)
Industry sector: Mining & Resources
Dividend yield: ~8.0%
Dividend payout frequency: Bi-annual
Franking credits available: Partially franked
BHP’s diversified commodity exposure (iron ore, copper, potash) has supported high returns and strong free cash flow. In 2024, they announced a special dividend due to surging prices.
Benefits:
- High yield driven by commodity demand
- Global operations diversify risk
Drawbacks:
- Earnings tied closely to volatile commodity markets
- ESG and decarbonisation transition risks
Source: https://www.bhp.com/investors
3. Telstra Group Ltd (ASX: TLS)
Industry sector: Telecommunications
Dividend yield: ~4.4%
Dividend payout frequency: Bi-annual
Franking credits available: 100% franked
Telstra has maintained reliable dividend payments while improving operational efficiencies and expanding 5G infrastructure.
Benefits:
- Defensive stock in turbulent markets
- Growth potential in 5G and digital services
Drawbacks:
- NBN migration impacts margins
- Regulatory risks and stiff competition
Source: https://www.telstra.com.au/aboutus/investors
4. APA Group (ASX: APA)
Industry sector: Utilities & Energy
Dividend yield: ~5.8%
Dividend payout frequency: Quarterly
Franking credits available: Unfranked
As Australia’s leading gas pipeline operator, APA benefits from long-term contracted revenue and a transition into renewables.
Benefits:
- Stable cash flows from long-term contracts
- Quarterly dividends provide regular income
Drawbacks:
- Rising debt levels
- Exposed to energy transition and borrowing costs3
Source: https://www.apa.com.au/investors/distributions/
5. Coles Group Ltd (ASX: COL)
Industry sector: Consumer Staples
Dividend yield: ~3.9%
Dividend payout frequency: Bi-annual
Franking credits available: 100% franked
Coles offers reliable dividends through economic cycles, supported by defensive retail demand and improved supply chain technology.
Benefits:
- Strong brand loyalty
- Essential goods provider
Drawbacks:
- Narrow margins
- Competition from Woolworths and Aldi
Source: https://www.colesgroup.com.au/investors/
Sector breakdown of high dividend ASX stocks
Financial Sector:
CBA, NAB, and Westpac dominate dividend-paying portfolios. Despite margin pressure, high capital buffers support payouts.
Mining & Resources:
BHP and Rio Tinto maintain high dividend yields due to strong commodity cycles. Be cautious of price downturns.
Real Estate Investment Trusts (REITs):
Goodman Group (ASX: GMG) is a top REIT but typically has a lower yield (~2–3%) as it reinvests heavily into logistics infrastructure. Scentre Group (SCG), Vicinity Centres (VCX), and GPT Group (GPT) offer higher yields (~5–6%) with retail asset exposure.
Telecommunications:
Telstra and TPG provide income and exposure to growing infrastructure and data services.
Utilities & Energy Sector:
APA Group remains a dominant player, while AusNet Services was taken private in recent years.
Consumer Staples:
Woolworths (ASX: WOW) and Coles offer consistent, franked dividends, albeit with lower growth.
What are the risks of investing in high dividend stocks on the ASX?
- Dividend cuts due to weak earnings (e.g. AMP, Crown Resorts)
- Sector concentration risk in banks and miners
- Interest rate sensitivity in REITs and utilities
- Currency risk in global companies (e.g., BHP)
- Tax implications, especially for investors in higher or lower tax brackets
Our tips for building a high dividend portfolio
- Diversify across sectors and industries
- Focus on quality, not just high yields
- Maximise franking benefits for tax efficiency
- Consider Dividend Reinvestment Plans (DRPs)
- Monitor payout ratios and earnings sustainability
- Review annually, especially after reporting seasons
- For those who are time poor, consider Managed Funds specialising in High-Dividend Stocks
How an investment adviser can help you build a high dividend yield portfolio?
An investment adviser can help you identify the right mix of high dividend stocks to suit your risk profile, financial goals, and tax position. From sector analysis to reinvestment strategies, their tailored advice can support long-term income and capital growth. Talk to one of our Brisbane based investment advisers for more information.
Book a consultation with an experienced financial adviser
Whether you’re approaching retirement or already retired, Solace Financial can help you build a reliable income stream through smart, dividend-focused investing.
Book a consultation with an experienced financial adviser in Brisbane and take the next step toward financial confidence.
High dividend ASX stock FAQs
Want to learn more about dividend investing? Here are some common questions:
What are fully franked dividends, and how do they work?
They include a franking credit that represents tax already paid by the company (typically 30%). Investors can use this to reduce their own tax liability.
How often are dividends typically paid on ASX-listed stocks?
Most ASX companies pay dividends bi-annually (twice a year), although some pay quarterly.
Can dividends decrease, and what are the reasons behind this?
Yes. Companies may cut dividends due to declining profits, rising debt, or economic uncertainty.
Are high dividend yields always a good investment indicator?
Not necessarily. A very high yield can sometimes signal underlying company trouble or an unsustainable payout.
Should I reinvest my dividends or take cash payouts?
It depends on your financial goals and income needs. Reinvestment supports compounding, while cash can provide income.
For tailored advice and to see if high dividend investing suits your goals, speak with a professional today.
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