Credeit Suisse is out with an interesting quant note screening for the best of Australia’s dividend stocks:
The Australian market offers the fourth highest dividend yield and the highest payout ratio within the G20 markets.
Quality and yield seem to be the dominant themes in the market place. Indeed, quality factors (such as return on equity and earnings certainty) are heavily favoured by our quant teams’ proprietary factor rotation models, and value factors (earnings and dividend yields) could be supported by RBA rate cuts (which would help to put a floor on expected earnings for domestic companies).
We have screened Credit Suisse coverage according to whether they offer high and sustainable dividend yields. Predictably, Banks, A-REITs, Healthcare and defensive exposures screen well on this basis.
In addition, we have asked Credit Suisse stock analysts which of these stocks could deliver an upside dividend surprise in the short term.
When the excersize combines both screens, the following list comes out:
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Looks like all of the obvious players are fully priced (to say the least). And this list may work at a fundamental level but in top down terms the preponderance of retail looks worrying. I wouldn’t buy Rio for all the ore in China!
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
