The ASX 200 dipped once again today. However, the index rallied towards the end to cut some of the losses, finally closing just 0.08% lower than yesterday. Technology, Healthcare, and Consumer Discretionary were the best performing sectors, whereas Utilities, Energy, and Materials were the worst performers.
The recent volatility has given rise to good investment opportunities. Few of the top dividend stocks are once again looking attractive after running high in the growth to value thematic shift from a few months ago. While the Big 4 Banks have always held the stature as the best dividend stocks on the ASX, their high prices and bleak growth profile has created a demand to look elsewhere. Here are the top 2 dividend stocks to keep an eye on now.
The Aussie supermarket giant operates liquor and express divisions along with supermarkets. After a rather torrid time for COL shares, they have started to rebound, returning close to 7% in the past month. The rebound has been largely due to normalising consumer behaviour and Coles cycling the significant impacts of Covid19. In the third quarter update, Supermarkets sales decreased by 6.1%. Liquor and Express sales increased by 2.6% and 7.4% respectively.
Early signs of normalising consumer behaviour were observed including improved transaction growth, a recovery of COVID-19 impacted categories such as impulse, convenience and food-to-go, and Sunday returning to be the busiest trading day of the week.
The narrative with Coles is that the stock price has had a correction recently and it has started moving in the right direction once again. With inflation being a matter of when rather than if, consumer staples with pricing power such as Coles is a good place to be as the firm can pass on the added cost to consumers. Consumers still have to buy groceries!
At market close, COL share price today is $17.02 a share, with a dividend yield of 3.59%. The high dividend yield and the relatively predictable cash flows make it an ideal dividend share to buy now.
Outside of the Big 4 banks, Suncorp, BOQ, and Bendigo have been performing well. These regional banks also have a relatively positive growth profile than the likes of CommBank, Westpac, NAB, and ANZ. SUN operates through banking and insurance segments, after recently selling their wealth business. It has its own brand of products but also operates under names like AAMI, GIO, Apia and Shannons.
Unlike the rest of the banks, SUN shares have not had a straightforward run as the economy roared back to life. It is because of its exposure to the insurance segment in addition to banking. Severe weather conditions and the likes affect the profitability of the business and SUN shares are usually in the spotlight when there are claims of this nature on the horizon.
Suncorp, much like the entire banking sector, had a fantastic half-year performance. Their cash earnings was up 39% and NPAT was up 23.7%, resulting in fully franked interim dividends of 26 cents a share. There was strong top-line growth in the Consumer and Commercial portfolios in both the Australian and New Zealand insurance businesses, higher investment returns and prior year reserve releases underpinning the positive performance.
With a favourable operating environment, SUN shares are expected to keep their run going and the full year result is expected to be largely positive, with another healthy dividend payout. The SUN share price today closed at $10.90 a share, with a dividend yield of 3.27% – making it another contender for the top dividend stocks on the ASX.
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