Which Australian Bank Pays The Best Dividends?

Australian Banks have long been popular investments among Aussie investors. One of the reasons has been the fact they have been among the best paying dividend shares.

Below is a table of the 6 largest banks listed on the ASX. They are ordered according to which bank pays the best dividends. All of the distributions paid by  shares listed in the table below are fully franked.

ASX Code	Company Name	Current Price	Dividend Yield	Annual Growth Rate	Payout Ratio
NAB	National Australia Bank	$33.49	5.9%	6.8%	80%
BEN	Bendigo and Adelaide Bank	$11.73	5.3%	9.5%	76%
ANZ	ANZ Banking Group	$33.49	5.2%	12.6%	70%
BOQ	Bank of Queensland	$12.00	5.2%	3.6%	90%
WBC	Westpac	$34.42	5.2%	13.7%	78%
CBA	Commanwealth Bank	$81.59	4.7%	12.4%	75%

As you can see the National Australia Bank is a clear leader in terms of yield, but there are a number of other factors to consider.

Why I Don't Like Dividend Reinvestment Plans

In my last post I discussed dividend reinvestment plans.  I know they are popular with some investors - in fact a quick search on Google yielded a number a websites devoted entirely to dividend reinvestment.  And while I can understand the attraction for some investors, DRPs are not for me.

So in this post I will discuss some of the disadvantages that I see with these plans.

To recap, a DRP allows existing shareholders to increase their holding by forgoing their cash dividend payments in exchange for new shares in the company.  There is no brokerage payable and to top it off, the shares are sometimes issued at a discount to the current market price.

So what's not to like?

Highest Dividend Paying Shares - The Micro-Caps

Earlier this year I looked at the ASX100 from an income investor's point of view in Highest Dividend Paying Stocks In The ASX100.  Then I gave the Small Caps a going over in Best Dividend Paying Shares - The Small Caps.

Today we're going to look at Micro Caps.  For the purposes of this exercise, I'm going to define Micro Cap stocks as anything outside the ASX 300 (ie. anything outside the largest 300 companies listed on the Australian stock exchange).

So in this first table, you'll find the top 10 dividend payers.

Best Dividend Paying Shares - The Small Caps

It's time for another 'best dividend stocks' type of post. Last time, in Highest Dividend Paying Stocks In The ASX100, I did just as the title suggests. I scoured the ASX100 looking for shares with the best income potential. While I stressed in that article that more investigative work would need to be done to whittle the list down to a handful of suitable investment candidates, I found the exercise useful and so did a number of readers.

Today's top dividend shares are all small caps. I have used the stocks which make up the S&P ASX Small Ordinaries index as a place to start my search. So based on historic dividend yield alone, I came up with the following list.

Highest Dividend Paying Stocks In The ASX100

It might surprise you to learn that over the long term dividends make up a large part of a share portfolio's returns. In a study by Elroy Dimson, Paul Marsh and Mike Staunton (see Keeping faith with stocks) it was found that "The longer the investment horizon, the more important is dividend income."

And for retirees, dividends are the life blood of their investment portfolio. While growth in the value of the portfolio is important in order to keep pace with inflation, it is the steady stream of dividends which pays the bills.

Even though I'm not a retiree, I still like dividends because along with my regular savings, they provide me with the cash to make further investments without the need to sell existing ones.