Buy Hold Sell: 5 stocks with monster dividends in 2024

Global markets soared to new heights in 2023, with the MSCI World Index (AUD) lifting 23.2%. Lucky for income-hungry investors, this saw dividends grow with it, with payouts up 8.9% in Aussie dollar terms, according to Plato Investment Management. 

While the majority of investors around the globe enjoyed increased dividend payouts in 2023 (compared to 2022), Australian investors were among the few who received less bang for their buck during the year, with dividend payouts falling 5.4%. Despite this, Australia was still the fifth-highest dividend-paying country in the world in the fourth quarter. 

So, where can investors generate more dosh for their dollar in 2024? Particularly as the cost of living continues to bite our bottom lines? 

In this episode, Livewire's Ally Selby was joined by Australia's two "Dividend Doctors" - Dr Don Hamson from Plato Investment Management and Michael O'Neill from IML. 

They run the ruler over three stocks with high expected one-year forward yields in 2024. Plus, they each name one stock that they believe could announce a monster dividend in the year ahead.

Note: This episode was recorded on Wednesday 14 February 2024 and first appeared on Livewire Markets. You can watch the video, listen to a podcast, or read the edited transcript below. 

Other ways to listen: 

• Podbean 

• Spotify

Edited Transcript

Ally Selby: Hey, how are you doing? And welcome to Livewire's Buy Hold Sell. I'm Ally Selby, and today we're taking a look at five stocks with monster dividends in 2024. What more could you want? To do that, we're joined by Dr. Don Hamson from Plato Investment Management and Dr. Michael O'Neill from IML. Thanks so much for joining us today. Very excited to have two dividend doctors on the show. Very rare. Let's get straight into it. First up, we have Ampol with a 1-year forward dividend yield of 7.08%. Don, I might start with you. Is it a buy, hold or sell?

Ampol (ASX: ALD)

Don Hamson (BUY): It's a buy from us. We have liked Ampol for a long time. They've got a lot of excess franking credits in their franking credit balance, so there's potential for special dividends down the line. Their refining margins were down in the December quarter, but the rest of their business is humming, so we love it.

Ally Selby: Okay. Its share price has done quite well over the last 12 months. It's up 18%. Over to you, Michael. Is it a buy, hold or sell?

Michael O'Neill (BUY): Buy. So in addition to Don's points, they do have a strategic infrastructure and a good network of property. If you think about refining margins in what people consider a sunset industry, the demand for refining is falling a lot slower than the removal of capacity. So margins should hold up and in the meantime, we quite like their strategy for generating more revenue from non-fuel retail.

Bendigo & Adelaide Bank (ASX: BEN)

Ally Selby: Okay. Next up we have Bendigo & Adelaide Bank with a 1-year forward dividend yield of 6.34%. Michael, staying with you, is it a buy, hold or sell?

Michael O'Neill (HOLD): It's a hold. Attractive dividend. Fully franked. Right now, the banks are in a good spot because there are no signs of any bad debt cycle, largely because of consumer savings buffers, but that doesn't detract from the fact that as a regional bank, it's at a structural disadvantage in terms of gathering low-cost deposit funding, and in terms of competing in what has been until recently, a very competitive mortgage market. In banking, scale is key - whether it's investing in simplification programmes, or digital and also meeting the regulatory hurdle for cyber and fraud, which is ever-increasing.

Ally Selby: Its share price has rebounded around 14% since the middle of November, recovering much of the losses made in 2023. Don, will 2024 be a better year for Bendigo Bank and is it a buy, hold or sell?

Don Hamson (HOLD): It's a hold for us too and for exactly the same reasons. I think you read my songbook. We'd much prefer the larger banks because there are definitely economies of scale in every part of their business or even Macquarie's done very well in that market because they've cherry-picked the high-networth people. The regionals are going to struggle, I think. Yes, the yield's not bad, but it still doesn't stand up to a couple of the bigger guys. You can get them on the 7-8% yield. So it's very much a hold for us.

Atlas Arteria (ASX: ALX)

Ally Selby: Okay. We're going to talk about a stock now with a yield of over 7%. It's Atlas Arteria, which has a 1-year forward yield of 7.38%. Don, is that one a buy, hold or sell?

Don Hamson (SELL): That's a sell for us. On every criteria we have - value, outlook, etc. It still hasn't seen all the impacts of higher interest rates come through. It's definitely a sell from us.Ally Selby: Okay. Its share price has plummeted around 20% over the past 12 months. Is it a sell also for you? Or a buy, or a hold?

Michael O'Neill (HOLD): It's a hold for us. That over 7% yield should be sustainable, certainly not growing for the reasons Don points out, but it is supported by predictable toll road revenues. However, there is one caveat - the road being built next to theirs, I94, will come on and compete with their Chicago Skyway acquisition. They own two-thirds of that business.

Ally Selby: Okay. We asked our guests to bring along one stock with a monster dividend in 2024. Very excited about this. Michael, what have you brought for us?

Aurizon (ASX: AZJ)

Michael O'Neill (BUY): Aurizon. So Aurizon's paying a yield of over 6.5%. At their result, they've just come out and said that their payout ratio could well be lifted. They're paying down debt and they've also already sunk capital into some strategic initiatives that they will deliver. Now, 60% of the value in the business is a regulated asset where they've just got a reset in terms of earnings. 40% is in coal haulage for some top-tier, low-cost producers of coal - likely that this business is going to be stable for longer because met coal is so important for countries such as India. So we see this as a company with a sustainable and growing yield.

Ally Selby: Okay. Over to you, Don. You are the dividend doctor. What's your prescription for monster dividends in 2024? 

JB Hi-Fi (ASX: JBH)

Don Hamson (BUY): I'm pushing this stock because I think it's defied the critics who have been calling it down for the last two years as interest rates have risen. It's a consumer discretionary stock, JB Hi-Fi. I could have picked Super Retail (ASX: SUL) as well. They're both very similar. It has a 7% yield, it actually reported this week with better-than-expected results and it's still trading on about a 7% yield. So it's been a great performer for us over the last couple of years.

Ally Selby: Well, I hope you enjoyed that monster dividend special of Buy Hold Sell as much as I did. If you did, why not give it a like? Remember to subscribe to our YouTube channel. We're adding so much great content just like this every single week.