Top 10 ASX Dividend Stocks to Watch in September 2023

Top 10 ASX Dividend Stocks to Watch in September 2023

Reading time: 8 Minutes

Dividend investing is a method of adding passive income to your investment portfolio, giving you the opportunity to withdraw, reallocate or reinvest. The Australian share market is an appealing option for those interested in dividend investing, as the nation is generally very stable, with solid growth, trade, and international relations. Australia is also rich in natural resources, and natural resource companies are frequent staples of the dividend landscape. 

When choosing dividend stocks, it’s important to consider the underlying fundamentals of the company you are considering investing in, including the financial situation of the company. Some important metrics when investing in dividend stocks are dividend yield, P/E ratio, and payout ratio. Often, the best dividend stocks are blue-chip with histories of profitability and reliable dividends. This article will go over some options on the Australian stock market that you might want to keep your eye on in September.

BHP Group (BHP)

Market Cap*: AU$232.767B

Dividend Yield*: 5.73%

BHP is a well-established Australian natural resource company and is usually the largest company on the ASX by market capitalisation. BHP specialises in the discovery and extraction of iron ore, coal, copper, and petroleum. BHP’s diversification between a few different commodities relative size, long history of dividend payouts, and high dividend yield make it a dividend stock worth considering for those looking to gain exposure to the Australian commodities sector.

Fortescue Metals Group (FMG)

Market Cap*: AU$62.162B

Dividend Yield*: 8.66%

Fortescue Metals Group is a company that specialises in developing iron ore. FMG has a long and generous dividend history, with substantial profit margins. FMG’s strong presence in the iron ore sector is compounded with a new focus on expanding into the green energy and renewables sector. This aligns well with global shifting attitudes around sustainability and could provide growth potential for those aiming for stock price appreciation and dividend growth in their portfolio.

Macquarie Group Limited (MQG)

Market Cap*: AU$65.884B

Dividend Yield*: 4.95%

Macquarie Group (MQG) is a global financial services group based in Sydney, Australia. Macquarie deals in asset management, retail & business banking, wealth management, leasing & asset financing, market access, commodity trading, renewables & sustainability, and more. MQG has a resilient and profitable track record, building a strong dividend payout history. Its emphasis on innovation and adaptability has allowed it to navigate through various market cycles with stability, potentially offering investors a blend of growth potential and dividend income.

The Australia and New Zealand Banking Group Limited (ANZ)

Market Cap*: AU$75.592B

Dividend Yield*: 6.15%

ANZ is a banking and financial products and services provider based in Australia. They are one of the largest banking groups in Australia and have significant influence in the Asia-Pacific region. The company has a well-diversified revenue generation model across the banking sector, including commercial, retail, and wealth management services. ANZ places a strong emphasis on responsible banking as well as social & environmental issues, making ANZ a considerable choice for investors who prefer a strong ESG profile in their portfolio.

Rio Tinto Limited (RIO)

Market Cap*: AU$163.877B

Dividend Yield*: 5.02%

Rio Tinto is an Australian-based global non-energy metals giant that mines and refines various non-energy metals, including iron ore, copper, aluminium, and minerals. The company’s broad geographical presence and diversified portfolio of mining operations provide a strong basis for weathering economic downturns or uncertain market conditions despite being a player in the often volatile commodities market. The company’s strong cash flow and robust balance sheet have allowed it to maintain a strong dividend history with high payout ratios and attractive yields.

Commonwealth Bank of Australia (CBA)

Market Cap*: AU$170.816B

Dividend Yield*: 4.41%

Headquartered in Sydney, CBA is one of the ‘big four’ banks in Australia, making it a relatively reliable company given its dominance in the sector. CBA operates in retail, business & institutional banking, insurance, fund management, and broking. The bank has maintained a healthy dividend payout ratio, often giving investors favourable yields. CBA also invests in technology to maintain and potentially grow its share of the industry.

Woodside Energy Group Limited (WDS)

Market Cap*: AU$72.53B

Dividend Yield*: 9.07%

Woodside Energy is a prominent player in the Australian energy sector, primarily dealing in the development and production of oil and gas. The company has a long history, being founded in 1954 and has a diversified portfolio of projects both domestically and overseas. The company has a very attractive yield of over 9% and a low P/E ratio. It’s important to consider, however, the volatility that can come with commodities, particularly in the oil & gas sector.

Bank of Queensland (BOQ)

Market Cap*: AU$3.845B

Dividend Yield*: 7.51%

Bank of Queensland is one of the oldest financial institutions in Australia, established in 1874 and headquartered in Queensland, Brisbane. They offer various financial services, including retail banking, commercial lending, leasing, foreign exchange, interest rate hedging, and more. Their dividend history is strong, with notably high payout ratios and a generous yield. However, high payout ratios may indicate that the company is not investing enough in its own growth, giving little in terms of stock price appreciation for shareholders.

Whitehaven Coal Limited (WHC)

Market Cap*: AU$5.582B

Dividend Yield*: 11.54%

Whitehaven Coal is an Australian Coal company that engages in the operation and development of both underground and open-cut coal mines. The company is adept at capitalising on the coal demands of the global market, providing both metallurgical coal (for steel production) and thermal coal (for energy production). Whitehaven is proud of its use of technology to implement efficient mining practices, increasing profitability and decreasing environmental impact. The company briefly ceased its dividend payments during the global pandemic due to losses however, since last year, it has resumed it with significant yields, showing its ability to recover from an adverse economic situation quickly. However, given the global shifts to renewables as an energy source, Whitehaven could face challenges in the long term.

New Hope Corporation (NHC)

Market Cap*: AU$4.954B

Dividend Yield*: 16.38%

New Hope has the highest dividend yield on this list by a significant margin, making it an enticing stock. While primarily an oil company, they have diversified into the oil and gas industry, providing some smoothing against the cyclical nature of the coal industry. While New Hopes strong profitability and high dividend yield make it very attractive in the near term, it is still a non-renewable energy company and long-term investors must keep in mind the global move toward renewable energy.

Key Takeaways

The ASX has many options in terms of dividend stocks for those looking to add income to their portfolio. This article reviews some options for those looking to get started in the dividend income space. However, always keep in mind that past performance does not guarantee future results, and this article does not consider your financial objectives and investing strategy.

*All yields are full-year, and market capitalisation numbers in this article are based on current share prices as of 5 September 2023.

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