Finding high dividend paying stocks for your SMSF can mean stable income with franking credits if the company provides them. The difficulty can be finding companies that will continue to pay the dividends and maintain their capital value at the same time. Dividends are usually announced with half yearly reports; this means determining probable future dividends is exceptionally complicated and time consuming.
First we need to understand how the dividend yield is calculated:
A dividend yield can appear inflated when the share price falls before the next dividend is paid. There is no point holding stocks that have high dividend yields if the capital value is depreciating at the same time. Therefore, a good filter to use is to ensure that the high dividend yield is supported by stable or rising prices.
Fortunately, our charting software , ProTrader Web, provides a quick and easy scan to identify these stocks. For our example, we will look to identify stocks that have paid more than 5% dividend p.a last year and show positive capital gains for the last 12 months above 5%.
1. Open the Scan for Fundamentals function in ProTrader Web
2. Select the following criteria in the scanner and adjust them for your price/volume filters
3. Hit Scan!
The scan results will show which companies are likely to pay dividends similar to last year. To check what the actual dividends are, head over to the latest half yearly report or relevant company announcement and research the dividends. If the dividend yield is above 10%, there’s a good chance the company returned capital to shareholders or paid a special dividend.