Whenever we talk about trading stocks (both buying and selling), there are usually two types of investors: ones who seek to get some gain with the positive price movement of their asset (capital gains) and ones who are more focused on generating passive income through their investment (dividends). In simplest terms, a dividend is a portion of a company’s annual earnings that is distributed among shareholders. Investors who want a passive income from their shareholdings always consider a stock’s dividend yield as its most crucial. A company’s declared dividend is representative of how much the firm will pay its investors on an annual basis. In this post, we will take a look at the best dividend stocks in the ASX for you to invest in. Let’s get started.

The Best Dividend Stocks in the ASX to Invest In 2021

Aurizon Holdings Limited (AZJ.AX)

Kicking off our list of the best dividend stocks in the ASX is Aurizon Holdings Limited. The firm, through its subsidiaries, operates as a rail freight operator in Australia. It operates through Network, Coal, Bulk, and Other segments. The company transports various commodities, including mining, agricultural, industrial, and retail products; and retail goods and groceries across small and big towns, and cities, as well as coal and iron ore. It also operates and manages the Central Queensland Coal Network that consists of 2,670 kilometers of track network; and provides various specialist services, such as rail design, engineering, construction, management, and maintenance, as well as supply chain solutions. In addition, the company transports bulk rail freight services for miners, primary producers, and the manufacturing industry. Further, it is involved in the general freight business. The company was formerly known as QR National Limited and changed its name to Aurizon Holdings Limited in December 2012. Aurizon Holdings Limited was incorporated in 2010 and is headquartered in Fortitude Valley, Australia.

In 2020, the company issued a final dividend of 13.7 cents per share – taking the full-year dividend to 27.4 cents per share.

By comparison, in FY19, Aurizon paid total dividends of 23.8 cents per share.

Dexus (DXS.AX)

Dexus is one of Australia’s leading real estate groups, proudly managing a high-quality Australian property portfolio valued at $32.1 billion. Dexus believes that the strength and quality of its relationships will always be central to its success and is deeply committed to working with its customers to provide spaces that engage and inspire. Dexus invests only in Australia, and directly owns $16.5 billion of office and industrial properties. Dexus manages a further $15.6 billion of office, retail, industrial and healthcare properties for third party clients. The group’s $11.4 billion development pipeline provides the opportunity to grow both portfolios and enhance future returns. With 1.6 million square metres of office workspace across 51 properties, Dexus are Australia’s preferred office partner. Dexus is a Top 50 entity by market capitalisation listed on the Australian Securities Exchange (trading code: DXS) and is supported by more than 29,000 investors from 24 countries. With 36 years of expertise in property investment, development and asset management, Dexus has a proven track record in capital and risk management, providing service excellence to tenants and delivering superior risk adjusted returns for investors. It is definitely a great dividend stock in the ASX.

Dexus said that it expected to make a distribution of 28.8 cents per share, covering the first half of FY21.

Fortescue Metals Group (FMG.AX)

Next on our list of the best dividend stocks in the ASX is Fortescue Metals Group Limited. It engages in the exploration, development, production, processing, and sale of iron ore in Australia, China, and internationally. It also explores for copper and gold deposits. The company owns and operates the Chichester Hub that includes the Cloudbreak and Christmas Creek mines located in the Chichester ranges; and the Solomon Hub comprising the Firetail and Kings Valley mines located in the Hamersley ranges of Pilbara, Western Australia. It is also developing the Eliwana mine situated in the Pilbara region of Western Australia. In addition, the company holds a portfolio of properties situated in Ecuador and Argentina. Further, it provides port towage services. Fortescue Metals Group Limited was founded in 2003 and is headquartered in East Perth, Australia.

In 2020, FMG paid out dividends totalling AUD$1.76 per share.

Stockland (SGP.AX)

Stockland (ASX:SGP) was founded in 1952 and has grown to become one of Australia’s largest diversified property groups owning, developing and managing a large portfolio of shopping centres, residential communities, workplace and logistic assets and retirement living villages. Stockland is consistently rated as one of the most sustainable real estate companies in the world by the Dow Jones Sustainability World Index (DJSI). One of the best dividend stocks in the ASX, Stockland is also an Employer of Choice for Gender Equality, as recognised by the Workplace Gender Equality Agency.

In 2020 Stockland’s full-year 2020 distribution came out to 24.1 cents per unit.

AGL Energy (AGL.AX)

Next on our list of the best dividend stocks in the ASX is AGL Energy Limited. It provides energy and other services to residential, small and large business, and wholesale customers in Australia. It operates in four segments: Wholesale Markets, Customer Markets, Group Operations, and Investments. The company engages in generating electricity through thermal, hydro, wind, and solar power generation plants; gas storage activities; and the retail sale of electricity, gas, solar, and energy products and services. The company operates an electricity generation portfolio of 11,208 megawatts; the Newcastle gas storage facility in New South Wales; the Silver Springs underground gas storage facility in Queensland; natural gas production assets at Camden in New South Wales; and the North Queensland gas assets. It serves 3.8 million customer accounts. AGL Energy Limited was founded in 1837 and is based in Sydney, Australia.

AGL paid a final dividend of 51 cents per share in September 2020, taking the company’s full-year dividends to 98 cents per share. By comparison, in 2019 AGL paid out total dividends of 119 cents per share.

Telstra Corporation Limited (TLS.AX)

Telstra Corporation Limited provides telecommunications and information services to businesses, governments, and individuals in Australia and internationally. The popular Australian brand is one of the best dividend stocks to buy. It operates in four segments: Telstra Consumer and Small Business, Telstra Enterprise, Networks and IT, and Telstra InfraCo. The company offers telecommunication products, services, and solutions across mobiles, fixed and mobile broadband, telephony and Pay TV/IPTV, and digital content; and online self-service capabilities, as well as operates inbound and outbound call centers, owned and licensed Telstra shops, and the Telstra dealership network. It also provides sales and contract management; and product management services for data and Internet protocol networks, mobility services, and network applications and services products, such as managed network, unified communications, cloud, industry solutions, and integrated services and monitoring. In addition, the company engages in the development of industry vertical solutions; planning, design, engineering architecture, and construction of Telstra networks, technology, and information technology solutions; and delivering network technologies. The company was formerly known as Australian and Overseas Telecommunications Corporation Limited and changed its name to Telstra Corporation Limited in April 1993. Telstra Corporation Limited was founded in 1901 and is based in Melbourne, Australia.

In 2020 Telstra paid 16 cent per share in total dividends, made up of special and ordinary dividends, leaving the blue-chip telco with a solid 5.28% payout ratio.

Woodside Petroleum (WPL.AX)

Next on our list of the best dividend stocks in the ASX is Woodside Petroleum Ltd. It engages in the exploration, evaluation, development, production, marketing, and sale of hydrocarbons in Oceania, Asia, Canada, Africa, and internationally. The company produces liquefied natural gas, pipeline natural gas, condensate, liquefied petroleum gas, and crude oil. It holds interests in the Greater Browse, Greater Sunrise, Greater Pluto, Greater Exmouth, North West Shelf, Wheatstone, Canada, Senegal, Greater Scarborough, and Myanmar projects. Woodside Petroleum Ltd was founded in 1954 and is headquartered in Perth, Australia.

Despite that, Woodside declared an interim dividend of 26 US cents per share, down from 2019’s interim dividend, but still leaving the oil major’s dividend yield hovering above 5%.

APA Group (APA.AX) 

APA Group develops, owns, and operates natural gas transportation and energy infrastructure in Australia. The company operates through three segments: Energy Infrastructure, Asset Management, and Energy Investments. It operates natural gas pipelines, gas storage facilities, gas processing facilities, gas compression facilities, electricity transmission, electricity interconnectors, and renewable and gas fired power generation assets; and operates solar farms and wind farms. As far as dividend stocks in the ASX are concerned, this is one of the best ones. The company has interests in approximately 15,000 kilometers of gas transmission pipelines; approximately 29,500 kilometers of gas mains and pipelines; and 1.4 million gas consumer connections. It also provides commercial, operating, and asset maintenance services to its energy investments and third parties; and invests in unlisted entities. APA Group was founded in 2000 and is headquartered in Sydney, Australia.

The company has an annual yield of slightly over 5%.

Origin Energy (ORG.AX)

Origin Energy Limited, an integrated energy company, engages in the exploration and production of natural gas, electricity generation, wholesale and retail sale of electricity and gas, and sale of liquefied natural gas in Australia and internationally. The company operates in Energy Markets and Integrated Gas segments. Its exploration and production portfolio includes the Bowen and Surat basins in Queensland; the Browse basin in Western Australia; and the Beetaloo basin in the Northern Territory. If dividend stocks are what you are looking for in the ASX, Origin Energy is a great choice. The company also generates electricity from coal, wind, pumped water storage, solar, and cogeneration plants; sells electricity, natural gas, and LPG; provides GreenPower and green gas products; and supplies LPG to homes and businesses. In addition, it offers electric and gas hot water systems, as well as hot water systems repair and replacement services; split system air conditioners; ducted and space heating solutions; ducted evaporative cooling systems; and ducted reverse cycle air conditioning systems. Origin Energy Limited was founded in 1946 and is based in Barangaroo, Australia.

The company paid a ‘stable’ dividend in 2020 (25 cents per share), implying an impressive dividend yield of 5.10%.

Rio Tinto Group (RIO)

Rounding up our list of the best dividend stocks in the ASX is the Rio Tinto Group. It engages in finding, mining, and processing mineral resources worldwide. The company offers aluminum, silver, molybdenum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. It is also involved in the alumina production; primary aluminum smelting; bauxite mining; alumina refining; and ilmenite, rutile, and zircon mining, as well as provision of gypsum. Rio Tinto Group was founded in 1873 and is headquartered in London, the United Kingdom. Rio has a dividend yield of 4.81%.

Because of the COVID-19 pandemic, 2020 was a very volatile year for most Australian stocks. A lot of strong dividend yielders such as the Big Four Banks either slashed their dividends or suspended them altogether. This step was in response to updated regulatory guidance and other negative events. However, some of the best dividend yielding stocks of the ASX such as FMG continued performing well and increased their dividend yields because of good macroeconomic conditions. 2021 is expected to be a year of recovery, but surprises might still spring up. However, the stocks that we discussed earlier in the post will be great for investors who are looking to get their hands on some of the high yielding dividend stocks of the ASX.