HomeStock MarketHow to Buy Dividend Stocks in Australia - Step by Step Guide

How to Buy Dividend Stocks in Australia – Step by Step Guide

This article will walk you through the most up-to-date information on how to buy dividend stocks in Australia.

Dividend investing is a method that provides investors with two sources of potential profit: regular dividend payments and stock capital gain over time.

Investing in dividend stocks can be a good way to generate income or grow their wealth by reinvesting dividend payments.

Purchasing dividend stocks is a technique that can appeal to investors seeking lower-risk investments.

Dividend-paying stocks can be among the least volatile to own.

However, there are still dangers to be aware of, and dividend stocks might be dangerous if you don’t know what to avoid.

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how to buy dividend stocks in australia
Photo credit: DataDrivenInvestor

What are Dividend Stocks?

Let’s go back to the beginning and define dividends.

A dividend is essentially a cash payment made by a corporation to an investor, and it’s calculated using an investor’s number of shares and the company’s declared dividend per share.

Take the Commonwealth Bank, for example. It declared that it would pay investors 98c per share during the reporting season.

Dividends would be paid to an investor who owned 100 bank shares and received $98 in dividends.

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The dividend is a distribution of a portion of a company’s earnings to a class of shareholders chosen by the firm’s board of directors.

As long as they own the shares before the ex-dividend date, common shareholders of dividend-paying firms are usually eligible.

Is it Worth it to buy Dividend Stocks?

Dividend-paying stocks allow investors to get paid even when the market is volatile, and capital gains are difficult to come by.

They are a good inflation hedge, especially when they expand over time.

Unlike other sources of income, such as interest on fixed-income investments, they are tax-advantaged.

How Many Shares you need to get Dividends?

The dividend per share (DPS) computation displays how much the company paid out in dividends for each share of stock during a given period.

Keeping track of a company’s dividend payout ratio (DPS) allows an investor to understand whether companies can expand their payouts over time.

The Best Dividend Stocks to buy in Australia

  • Fortescue Metals Group (Fortescue Metal)

FMG’s stock has soared in value over the previous two years, thanks to robust iron ore prices, and the miner now has a market capitalization of over $55 billion.

FMG will pay out AUD 1.76 per share in dividends year 2020. Dividends would increase even further in 2021, with the miner paying total dividends of $3.58 per share.

  • AGL Energy 2020 has been a challenging year for AGL shareholders

With the stock plunging more than 30% since January as wholesale electricity prices fell sharply, reducing the energy provider’s earnings. The stock’s decline extended into CY21, with a 48 percent drop from January to September 2021.

The energy company’s dividend has remained reasonably stable despite the stock’s decline. The latest two dividends paid by AGL were $0.34 per share and $0.41 per share, respectively.

  • Stockland, no. 3

Stockland has kept its distribution payments consistent despite the disruptions caused by the coronavirus pandemic.

Stockland announced a final payout of $0.13 per share as part of its most recent results, bringing total distributions for the year to $0.246 per security, up 2.1 percent year over year.

  • Aurizon Holdings is the fourth largest company in the United States.

Aurizon’s dividends increased in 2021 despite lower revenue and profitability (EBIT) in FY21.

The corporation declared a final dividend of $0.144 cents per share, 5% greater than the 2020 final dividend. The company’s full-year dividends (FY21) increased by 5% to $0.288 per share.

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One must purchase the stock before the ex-dividend date to be a stockholder of record and thus eligible to receive the dividend for this quarter.

You will not get the dividend if you buy the stock on or after the ex-dividend date.

When do Dividends get Paid in Australia?

Dividends are paid twice a year on average.

A portion of the company’s profits is divided and distributed to shareholders based on the number of shares they possess.

Top 10 Stocks that Pay Monthly Dividends

  • Dynex Capital, Inc. (NYSE: DX)

Dynex Capital, Inc. (NYSE: DX) is a Virginia-based real estate investment trust (REIT). Issued Holdings Capital Corporation is one of its subsidiaries, and it ranks 12th on our list of the best companies that pay monthly dividends.

Nine hedge funds out of 873 monitored by Insider Monkey had a $27 million holding in Dynex Capital, Inc. (NYSE: DX) at the end of the second quarter of 2021.

This compares to 8 hedge funds with a total position worth around $24 million in the previous quarter.

  • LTC Properties, Inc. specializes in the development and management of real estate (NYSE: LTC)

LTC Buildings, Inc. (NYSE: LTC) is a healthcare real estate investment trust that makes sale-leasebacks, mortgage financing, joint ventures, and structured finance solutions such as preferred stock and mezzanine credit investments in seniors housing and healthcare assets.

The company is placed 11th on our list of the best stocks for monthly dividends.

By the end of the second quarter of 2021, ten hedge funds out of 873 tracked by Insider Monkey had $9 million in LTC Properties, Inc. (NYSE: LTC) positions.

  • Prospect Capital Corporation (NASDAQ: PSEC)

Prospect Capital Corporation (NASDAQ: PSEC), a business development firm, focuses on transactions in the middle market, mature, mezzanine finance, later stage, emerging growth, and other areas.

The company comes in at number ten on our list of the top stocks for monthly dividends. The company’s headquarters are in New York.

  • Broadmark Realty Capital Inc. (NYSE: BRMK)

Broadmark Realty Capital Inc. (NYSE: BRMK) underwrites, funds, services and maintains a short-term and first deed of the trust loan portfolio to fund the development of residential and commercial buildings in the United States.

The company is ranked ninth on our list of the top stocks for monthly dividends.

  • Gladstone Land Corporation, (NASDAQ: LAND)

The following stock on our list of the top stocks that pay monthly dividends is Gladstone Land Corporation (NASDAQ: LAND), a publicly-traded REIT. The corporation, ranked eighth, buys and owns farmland in the United States to lease to third-party farmers.

Gladstone Land Corporation (NASDAQ: LAND) reported an FFO of $0.13 in the second quarter of 2021. Revenue was $16.89 million, up 33.67 percent year over year and $0.28 million higher than expected.

  • ARMOUR Residential REIT, Inc (NYSE: ARR)

ARMOUR Residential REIT, Inc. (NYSE: ARR) is a mortgage-backed securities (MBS) REIT based in the United States. The company is situated in Florida and ranks 7th on our list of the best stocks that pay monthly dividends.

As of July, B. Riley has a Neutral rating on ARMOUR Residential REIT, Inc. (NYSE: ARR) with an $11.50 price target.

Watch the video below to learn how to buy dividend stocks in Australia:

  • STAG Industrial, Inc. is a manufacturer of industrial equipment (NYSE: STAG)

STAG Industrial, Inc. (NYSE: STAG) is a real estate investment trust (REIT) specializing in single-tenant industrial buildings throughout the United States.

The Boston-based company is ranked 6th on our list of the best stocks for monthly dividends.

Out of 873 tracked by Insider Monkey, fifteen hedge funds had positions in STAG Industrial, Inc. (NYSE: STAG) worth $232 million.

In the previous quarter, 17 hedge funds were involved, with a total investment of about $173 million.

For Australian and worldwide markets, the years 2020 and 2021 have shown to be highly volatile.

In reaction to new regulatory advice and other evil occurrences, several dividend stalwarts, such as the Big Four Banks, were compelled to decrease or discontinue their payouts.

While the banks have already (to some extent) recovered their dividends, investors are likely to be more conscious of the regulator’s strength.

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