ASX Dividend Stocks With 5% Yields That Stand Out Right Now

With central banks keeping policy rates steady and traders pulling back expectations for rapid US hikes after softer jobs data, dependable income from shares has fresh appeal. Cash yields can change quickly. Reliable dividend streams from companies screened for yields above 5% that appear well covered, growing and stable can stand out. This article walks through three Dividend Powerhouses and why they may deserve a spot on your watchlist.

The three stocks covered below are only a starting sample, as the full Dividend Powerhouses screen surfaced 28 more companies with equally compelling income stories that are not included in this article.

To identify your own high conviction dividend ideas, head straight to the Dividend Powerhouses (3%+ Yield) screener and use it to filter and analyze the full list on your terms.

CSL (ASX:CSL)

Overview: CSL is a global biopharmaceutical group that turns human plasma, vaccines and specialty medicines into treatments for serious conditions such as immune deficiencies, bleeding disorders, respiratory disease and kidney related illness, while also supplying influenza vaccines and iron deficiency therapies to healthcare systems worldwide.

Operations: CSL generates most of its revenue from CSL Behring at about $10.9b, with additional contributions from CSL Vifor at about $2.4b and CSL Seqirus at about $2.2b.

Market Cap: A$63.3b

CSL sits at an interesting crossroads for dividend investors. You get exposure to a global leader in plasma therapies and vaccines, a growing pipeline that includes products like ANDEMBRY, and a range of analyst expectations for the business over the coming years. At the same time, you need to be comfortable with some real pressure points. Profit margins are currently about half last year’s level, dividends are not well covered by earnings, and the balance sheet carries a high level of debt. Investors looking for a combination of income and long term growth potential may find CSL a stock worth studying more closely before the restructuring story and one off charges are fully behind it.

CSL’s squeezed margins and high debt are only half the story. The real question is how its plasma leadership and pipeline stack up when you line every moving part up against the 2 key rewards and 4 important warning signs

Build your own dividend shortlist around CSL

CSL and the two other stocks in this article are just a sample of what surfaces when you start screening for income, quality and balance sheet strength. Use our flexible Screener to shape filters around what matters most to you, or jump straight into our curated Investing Ideas for ready made starting points.

QBE Insurance Group (ASX:QBE)

Overview: QBE Insurance Group is a global insurer and reinsurer that covers a wide range of risks, from home, motor and health to commercial property, crop, marine, energy and aviation. It also manages Lloyd’s syndicates and offers investment management services.

Operations: QBE generates most of its revenue from International at about US$11.2b, followed by North America at about US$8.2b, Australia Pacific at about US$5.7b and Corporate & Other at about US$77m.

Market Cap: A$36.5b

QBE Insurance Group offers income seekers an interesting mix of global reach, growing cyber and specialty lines, and a strong capital base that recently attracted affirmed A and a+ credit ratings. It still trades on a P/E below its global industry average, with analysts estimating a sizeable gap to intrinsic value. Earnings growth over the past five years has been rapid and returns on equity sit in the mid teens. However, premium rate pressure, volatile catastrophe losses and an unstable dividend history mean the ride may not always be smooth. For investors who are looking for a higher yielding insurer with quality signals and who are willing to accept underwriting and funding risks, QBE may warrant closer consideration.

QBE Insurance Group’s global scale, affirmed credit ratings and below industry P/E suggest that the market may be overlooking how its earnings and capital story fit together. Read the 3 key rewards and 1 important warning sign

Evolution Mining (ASX:EVN)

Overview: Evolution Mining is an Australia based gold producer that explores, develops and operates gold and gold copper mines in Australia and Canada, while also producing copper and silver concentrates for sale into global markets.

Operations: Evolution Mining generates most of its revenue from Cowal at about A$1.7b and Ernest Henry at about A$1.1b, with further contributions from Mungari at about A$780 million, Red Lake at about A$670 million, Northparkes at about A$580 million, and smaller amounts from Mt Rawdon and Corporate.

Market Cap: A$27.2b

Evolution Mining offers income oriented investors something different from the usual big bank or utility. High current margins of around 26% and strong return on equity above 20% sit alongside copper exposure, a lithium joint venture and recent deals such as the planned Carnaby Resources acquisition and the Arizona Gold & Silver investment. These all point to a push into longer life, multi commodity growth. At the same time, investors need to weigh this against an unstable dividend record, higher reliance on external borrowings and the risk that premium expectations for gold, ESG credentials and earnings forecasts prove too optimistic. For investors seeking yield plus growth optionality tied to gold and future facing metals, Evolution Mining may warrant closer inspection.

Evolution Mining’s push into longer life, multi commodity growth, from copper to lithium exposure, is only half the story. See how that thesis stacks up against the risks in the 2 key rewards and 1 important warning sign

Seeking Alternatives Before The Crowd Moves

Fresh ideas move first, then headlines follow. Identify potential breakout opportunities and steady compounders while they are still under the radar. Time may be limited, so consider reviewing your options promptly.

• Look for resilient operators with relatively strong balance sheets and consistent cash profiles using the curated list of solid balance sheet and fundamentals (19 results) before others focus on the same opportunities.
• Explore potential new leaders in robotics and automation as capital reallocates toward efficiency by using the focused 37 robotics and automation stocks while the story is still developing.
• Review opportunities tied to energy security and infrastructure with the hand picked 89 nuclear energy infrastructure stocks before changes in sentiment affect valuations.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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