Exploring ASX Dividend Stocks: Avoiding Lottery And Highlighting One Superior Option
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In the pursuit of reliable dividend income from ASX-listed companies, investors should be cautious about high payout ratios. While a generous dividend can be appealing, it's essential to verify if these payouts are supported by the company's earnings. A high payout ratio may indicate that dividends are not sustainable over time, potentially leading to financial difficulties for the company, as seen with some firms like Lottery.
Top 10 Dividend Stocks In Australia
| Name | Dividend Yield | Dividend Rating |
| Collins Foods (ASX:CKF) | 3.14% | ★★★★★☆ |
| Nick Scali (ASX:NCK) | 5.27% | ★★★★★☆ |
| Fiducian Group (ASX:FID) | 4.11% | ★★★★★☆ |
| Charter Hall Group (ASX:CHC) | 4.05% | ★★★★★☆ |
| Fortescue (ASX:FMG) | 9.29% | ★★★★★☆ |
| Centuria Capital Group (ASX:CNI) | 7.21% | ★★★★★☆ |
| Eagers Automotive (ASX:APE) | 7.10% | ★★★★★☆ |
| Premier Investments (ASX:PMV) | 4.54% | ★★★★★☆ |
| Diversified United Investment (ASX:DUI) | 3.17% | ★★★★★☆ |
| Australian United Investment (ASX:AUI) | 3.59% | ★★★★☆☆ |
Click here to see the full list of 27 stocks from our Top ASX Dividend Stocks screener.
Here's a peek at one of the choices from the screener and one that may be safer to dodge.
Top Pick
New Hope
Simply Wall St Dividend Rating: ★★★★☆☆
Overview: New Hope Corporation Limited, with a market cap of A$4.37 billion, is engaged in the exploration, development, production, and processing of coal and oil and gas properties.
Operations: The company generates revenue primarily from its coal mining operations in New South Wales and Queensland, totaling A$1.93 billion.
Dividend Yield: 8.3%
New Hope's dividend yield of 8.32% ranks in the top quartile of Australian dividend payers, offering an attractive return compared to the market average of 6.59%. However, its dividends are not well supported by cash flows, with a high cash payout ratio of 90.2%, indicating potential sustainability issues despite a more moderate earnings payout ratio at 48.4%. Recent board changes could influence future financial strategies, but historically, dividend payments have been volatile and unreliable over the past decade.
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Unlock comprehensive insights into our analysis of New Hope stock in this dividend report.
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Our valuation report unveils the possibility New Hope's shares may be trading at a discount.
One To Reconsider
Lottery
Simply Wall St Dividend Rating: ★☆☆☆☆☆
Overview: The Lottery Corporation Limited operates in the lottery and keno sectors within Australia, with a market capitalization of approximately A$11.11 billion.
Operations: The company generates revenue primarily through its lotteries and keno segments, totaling approximately A$3.20 billion and A$279.70 million respectively.