Dividend investing on the ASX remains one of the most reliable ways to build long-term wealth. Blue chip dividend stocks offer a combination of regular income and capital growth that is difficult to replicate through other strategies, particularly in an environment where interest rates are falling and term deposit returns are compressing. For income-focused investors, the ASX has historically been one of the highest-yielding developed markets in the world, and the franking credit system makes Australian dividends even more attractive on an after-tax basis.
We focus on companies with sustainable payout ratios, strong free cash flow generation, and a track record of maintaining or growing their dividends through economic cycles. A high yield on its own is not enough. The dividend needs to be backed by a business that can support it through downturns and continue growing it over time. We also look for catalysts that could drive earnings higher, because a growing dividend is ultimately more valuable than a static one.
The five stocks below represent our current best ideas for dividend income on the ASX. Each has been through a full research process covering financials, competitive positioning, payout sustainability, and valuation. We update this page regularly as new research is published.
Last updated 22 September 2026.
| Stock | Rating | Price Target | Div Yield | Why We Like It |
| Worley Ltd (ASX: WOR) | Buy | A$13.00 | 5.1% unfranked | 50 cents covered at 64% of underlying earnings, with the share count down 5.5% in FY26 and another A$300m buyback running |
| Qantas Airways Ltd (ASX: QAN) | Buy | A$12.45 | ~4.2% FF | FY26 dividend of 39.6 cents fully franked, backed by Loyalty’s resilient earnings through peak fleet-renewal capex |
| Amcor Plc (ASX: AMC) | Buy | A$81.40 | 5.6% | Quarterly unfranked dividend covered by rising earnings, with leverage falling from 3.5x to 3x by the end of 2027 |
| Nick Scali (ASX: NCK) | Buy | A$20.10 | ~5.0% FF | 65% gross margins sustaining a fully franked dividend, re-rated cheaply on a temporary earnings dip |
| Metcash (ASX: MTS) | Buy | A$3.80 | 5.8% | Trough earnings with hardware cycle recovery ahead, yield rising to 7.4% by FY28 |
Our Top 5 Dividend Stocks To Buy on the ASX
Worley Ltd (ASX: WOR)
Buy, 12-month price target A$13.00, dividend yield ~5.1% unfranked. Price target and upside based on prices at time of publication.
Worley is a global engineering and project delivery company serving the energy, chemicals and resources sectors. The board declared a final dividend of 25 cents unfranked, payable on 30 September, taking FY26 to 50 cents. That is the same 50 cents the company has paid in every year since FY2021, so this is not a growing dividend and we would not present it as one. At A$9.86 it is a 5.1 per cent yield, and because Worley pays unfranked there are no credits attached, which means an Australian resident able to use franking gets less after tax from it than from a fully franked dividend of the same cash amount. That is the first thing to understand before buying this for income.
What it does have is cover. The 50 cents is 64 per cent of the 78.2 cents of underlying earnings per share Worley produced in FY26, inside the company’s own 50 to 70 per cent policy band. That underlying figure absorbed about A$58 million of Middle East disruption, while a further A$120 million of transformation and restructuring costs was taken below the underlying line. Normalised cash conversion, which adjusts for movements in advance billings, was 93.6 per cent and days sales outstanding improved from 52.0 to 44.3, so the earnings are turning into cash. The balance sheet carries net debt of A$1,746 million at 1.8 times leverage against a target of about 2.0 times, with A$2,116 million of liquidity. The weighted average cost of debt was 4.4 per cent and management expects it to rise to around 6.0 to 6.2 per cent in FY27 following the note refinancing completed in June, which is a genuine headwind, and there is no net tangible asset backing underneath any of it.
The part of the income story that is actually moving is the denominator. Worley bought back and cancelled 29,852,701 shares for A$359 million in FY26 and issued 1,513,731 against performance rights, taking the register from 516.3 million shares to 488.0 million, a net reduction of 5.5 per cent in one year, and a further A$300 million programme is under way. Buying back 5 per cent of a company trading on 12.6 times earnings looks a better use of cash to us than lifting a payout that carries no franking, and it lowers the cash cost of holding the payment flat, with total dividends falling from A$261 million to A$248 million in FY26 even as the per share amount held. Institutional sell-side research has a 12 month price target of A$13.00 on the stock. With FY27 guided to mid to high single digit growth in both aggregated revenue and underlying EBITA, that is the mechanism to watch rather than the headline 50 cents. Read the full article on Worley here.
Qantas Airways Ltd (ASX: QAN)
Buy, 12-month price target A$12.45, forward dividend yield ~4.2% fully franked. Price target and upside based on prices at time of publication.
Qantas Airways is Australia’s largest airline group, running the full service domestic and international networks, the Jetstar low cost carrier, a freight business and the Qantas Frequent Flyer loyalty program. The board declared a fully franked final base dividend of 19.8 cents per share, worth $300 million and payable on 14 October, taking FY26 to 39.6 cents. At A$9.39 that is a 4.2 per cent yield, and because it carries full franking credits it is worth roughly 6.0 per cent grossed up to an Australian resident who can use them.
The headline payment is smaller than last year and the reason matters. FY25 distributions included special dividends on top of the base and FY26 carried none, while the base dividend itself rose from $250 million a half to $300 million a half. Qantas has said it intends to maintain fully franked base dividends of $300 million each half as sustainable through the cycle, subject to board approval, and describes specials separately as sized from surplus capital. The payout sits at about 41 per cent of underlying earnings per share of 96 cents, struck in a year the fuel bill rose $610 million and the conflict in the Middle East cost $420 million. The $150 million buy-back announced with the first half result was also pulled. We would rather see that than a company borrowing to buy its own stock in the middle of the largest fleet renewal in its history, but it is a withdrawn promise and it should be read as one.
What sits behind the dividend from here is a mix of a resilient annuity and a long capital program. Qantas Loyalty grew underlying earnings 12 per cent to $625 million at a 21.7 per cent margin in a year the flying businesses were absorbing record fuel costs, is guided up another 5 to 7 per cent in FY27, and is on track for a 2030 target of $800 million to $1.0 billion. Against that, net capital expenditure was $4.0 billion in FY26 and is guided to $4.3 to $4.6 billion in FY27 as the international fleet turns over, with net debt of $6.2 billion expected to reach the top of its $5.5 to $6.9 billion target range by June 2027. Fleet has first call on the cash for the next several years, so this is a fully franked yield with real cover behind it rather than a payout being stretched. Read the full article on Qantas here.
Amcor Plc (ASX: AMC)
Buy, 12-month price target A$81.40, forward dividend yield ~5.6% unfranked. Price target and upside based on prices at time of publication.
Amcor is one of the largest packaging companies in the world, making flexible packaging, rigid containers and closures for the food, beverage, healthcare and personal care industries across more than 40 countries. It pays quarterly rather than half-yearly, which is unusual on the ASX. The most recent declaration was US$0.65 per CDI, converted to A$0.92 for Australian holders, with payment on 24 September. Annualised, that is about A$3.68 per share and a forward yield of roughly 5.6 per cent.
The important caveat for an income portfolio is that this dividend is unfranked. Amcor is a foreign incorporated company paying out of offshore earnings, so there are no franking credits attached, and against a fully franked 5 per cent yield from a domestic industrial the Amcor payment is worth less after tax to most Australian residents. What it offers instead is a genuinely global, genuinely defensive earnings base and a quarterly payment cycle, which is a different diversification job from a bank or an insurer.
What has changed is the cover behind the dividend. June quarter comparable volumes turned positive for the first time in this cycle, group adjusted EBIT rose about 22 per cent on a comparable basis, and the Berry integration delivered about US$285 million of synergies in year one against an original plan of US$260 million. Net debt to EBITDA finished at 3.5 times, which is the legacy of paying for Berry, and the company has reaffirmed a path to three times by the end of 2027 that it intends to fund through those synergies and the divestment proceeds. That is a plan rather than a guarantee and the dividend remains discretionary, but a business paying out somewhere in the mid sixties as a percentage of earnings while its leverage falls has considerably more room than one whose leverage is going the other way. Read the full article on Amcor here.
Nick Scali Ltd (ASX: NCK)
Buy, 12-month price target A$20.10, FY26E dividend yield ~5.0% fully franked. Price target and upside based on prices at time of publication.
Nick Scali is Australia’s leading furniture retailer, operating 113 showrooms across ANZ and expanding into the UK through the Plush acquisition. The business generates some of the best margins in Australian retail, with ANZ gross margins consistently above 65%. That margin quality underpins a fully franked dividend even through a period of softer earnings, as the post-COVID furniture boom unwound and the UK build-out weighed on near-term NPAT. The stock re-rated sharply lower on those headwinds, creating an entry point at a meaningful discount to fair value.
The dividend story is the core of the income case. Nick Scali has maintained fully franked dividends through the earnings cycle, and as UK revenues scale and ANZ volumes recover, earnings growth should support a rising payout from FY26 onwards. A ~5% fully franked yield at current prices is meaningfully more attractive on a grossed-up basis for Australian taxpayers. With the price target at A$20.10, there is also significant capital upside alongside the income, which puts NCK in rare company on this list.
We think Nick Scali offers an unusual combination of retail income, structural margin quality and capital upside that is hard to find elsewhere on the ASX. Read the full article on Nick Scali here.
Metcash Ltd (ASX: MTS)
Buy, 12-month price target A$3.80, FY26E dividend yield 5.8%. Price target and upside based on prices at time of publication.
Metcash is Australia’s leading wholesale distributor operating across food, hardware and liquor. The food division supplies the IGA network, hardware encompasses IHG, Mitre 10 and Total Tools, and the liquor arm operates through brands including Cellarbrations and IGA Liquor. The company is currently trading at a 28% PE discount to the ASX200, which we think significantly overstates the risk here given that earnings are sitting at a cyclical trough rather than reflecting any structural deterioration in the business.
The dividend story is compelling. A 5.8% yield on a 70% payout ratio provides meaningful income while investors wait for the hardware cycle to turn. As earnings recover through the hardware division, we expect the yield to grow to 7.4% by FY28 on our estimates. The hardware division is running at depressed margins of 3.7% versus a mid-cycle level of 6% or higher, which implies significant operating leverage as volumes recover with rate cuts anticipated from early 2027.
We think Metcash offers the best combination of current yield and dividend growth potential on this list. Read the full article on Metcash here.
How We Select Dividend Stocks
Our process for selecting the best dividend stocks on the ASX goes beyond simply screening for the highest yields. We evaluate each company across several dimensions including payout ratio sustainability, free cash flow coverage, balance sheet strength, and the trajectory of future earnings growth. A high yield that is funded by debt or declining earnings is not a genuine income opportunity, so we focus on businesses where the dividend is backed by real cash generation.
We also consider the total return picture. A stock yielding 4% with 20% upside to our price target will often be more attractive than one yielding 6% with limited capital growth potential. Each stock on this list has been through a full research process that includes detailed financial modelling, industry analysis and management assessment. We update the page as new research is published or when material changes occur to any of the investment cases.
If you would like to discuss any of these names or how they might fit within your portfolio, request a callback or call us on 1300 889 603.
