5 Best Dividend Stocks to Buy [ASX Blue Chip Stocks]

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 26 October 2026.

Table of contents [hideshow]

• 1. Our Top 5 Dividend Stocks To Buy on the ASX
• 2. How We Select Dividend Stocks

Our Top 5 Dividend Stocks To Buy on the ASX

Rio Tinto (ASX: RIO)

Buy, 12-month price target A$176.30 (20.5% upside), ~4.5% dividend yield, fully franked. Rating and price target from institutional sell-side research; upside based on prices at time of publication.

Rio Tinto is a diversified miner listed on the Australian Securities Exchange, and its two biggest businesses are iron ore and copper. It runs the Pilbara iron ore system in Western Australia and the new Simandou mine in Guinea, owns the Oyu Tolgoi and Kennecott copper operations, and also has bauxite, alumina, aluminium and a lithium business in Argentina. The September quarter was in line with expectations. Group copper production was 205kt, and Oyu Tolgoi produced 114kt, up 27 per cent on a year earlier. Global iron ore sales were 90.8Mt, up 3 per cent, and Simandou reached an annualised production rate of around 10Mtpa. All 2026 production, sales and unit cost guidance was left unchanged, including 800 to 870kt of consolidated copper production.

Copper is forecast to deliver around 45 to 50 per cent of group EBITDA in 2026, rising to around 60 per cent by 2030. The research forecasts EBITDA to grow by around 30 per cent from 2025 to 2030 as Oyu Tolgoi, Simandou and the Pilbara replacement mines ramp up. Simandou is close to first ore through its port, and the 60Mtpa run-rate in the second half of 2028 was reaffirmed. Rio Tinto is also selling non-core assets. It has announced more than US$2 billion of capital release so far this year and is on track for around US$5 billion by the end of 2026, cash that can help pay down debt. EBITDA is forecast to ease to US$25,303.7 million in 2027, the year lower gold grades at Oyu Tolgoi, falling molybdenum output and Pilbara port works all land.

The shares closed at A$146.27. Institutional sell-side research has a 12 month price target of A$176.30, which is 20.5 per cent above that close. The target was trimmed by about 1 per cent from A$178.60 after small forecast cuts to reflect the result, lithium prices and higher net debt, and the rating is unchanged. Earnings per share are forecast at US$7.87 for 2026, against US$6.70 in 2025. The trailing dividend of about A$6.63 per share is a 4.5 per cent yield, and it is fully franked, so an Australian resident who can use the franking credits gets more after tax than the cash amount alone. The main risks are commodity prices, heritage approvals in the Pilbara, which is around 50 per cent of the group’s value, and delays to growth projects. The thesis depends on growth over several years, with the fully franked yield providing income in the meantime. Read the full article on Rio Tinto here.

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.

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, request a callback or call us on 1300 889 603.