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Dividend growth is a key indicator of a company's financial health and its ability to sustain and increase payouts to shareholders. However, not every stock that offers dividends is an attractive investment, especially if its dividend history shows signs of decline. In this article, we will explore two Australian stocks: one that presents a promising dividend option and another, Vulcan Steel, which has experienced diminishing dividends, signaling potential caution for investors seeking reliable income streams.
Top 10 Dividend Stocks In Australia
| Name | Dividend Yield | Dividend Rating |
| Nick Scali (ASX:NCK) | 5.29% | ★★★★★☆ |
| Collins Foods (ASX:CKF) | 3.10% | ★★★★★☆ |
| Centuria Capital Group (ASX:CNI) | 7.34% | ★★★★★☆ |
| Eagers Automotive (ASX:APE) | 7.23% | ★★★★★☆ |
| Fiducian Group (ASX:FID) | 4.07% | ★★★★★☆ |
| Fortescue (ASX:FMG) | 8.81% | ★★★★★☆ |
| Charter Hall Group (ASX:CHC) | 3.96% | ★★★★★☆ |
| Premier Investments (ASX:PMV) | 4.59% | ★★★★★☆ |
| Diversified United Investment (ASX:DUI) | 3.17% | ★★★★★☆ |
| Australian United Investment (ASX:AUI) | 3.58% | ★★★★☆☆ |
Click here to see the full list of 27 stocks from our Top ASX Dividend Stocks screener.
Let's dive into one of the prime choices out of the screener and one to possibly skip over.
Top Pick
IGO
Simply Wall St Dividend Rating: ★★★★☆☆
Overview: IGO Limited is an Australian exploration and mining company specializing in metals crucial for clean energy, with a market capitalization of approximately A$4.48 billion.
Operations: IGO Limited generates revenue primarily through its Nova Operation and Forrestania Operation, totaling approximately A$903.4 million.
Dividend Yield: 9.3%
IGO Limited, despite a high dividend yield of 9.27%, faces challenges with its sustainability, as the payout ratio stands at 185%, indicating that dividends are not well covered by earnings. Additionally, while IGO's dividend payments have increased over the past decade, they have been volatile and unreliable during this period. On a positive note, the dividends are supported by cash flows with a cash payout ratio of 39.7%. Recent board changes could influence future financial strategies and performance.
One To Reconsider
Vulcan Steel
Simply Wall St Dividend Rating: ★★☆☆☆☆
Overview: Vulcan Steel Limited operates in New Zealand and Australia, focusing on the sale and distribution of steel and metal products, with a market capitalization of approximately A$847.59 million.
Operations: The company generates revenue from two primary segments: Metals, contributing NZ$638.86 million, and Wholesale - Miscellaneous, adding NZ$532.02 million.