Here are 5 of the best dividend shares to buy on the ASX in 2018

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Dividend shares are incredibly popular amongst ASX investors, including self managed super funds (SMSF).

Not only do dividend shares pay a good level of income, they also offer the very real potential for capital appreciation.

Dividends are a hugely important component of share market returns. For example, although the ASX 200 index still remains below its 2007 high, when dividends are included, the Australian share market is trading at close to all-time highs.

Companies that pay fully franked dividends become even more attractive, and are particularly popular with retirees and SMSFs.

Finding the best dividend shares to buy now takes more stock research than just focusing on the high yielding popular blue chip stocks. For example, despite trading on an attractive fully franked dividend yield, Telstra (ASX:TLS) shares have fallen 33 per cent over the past 12 months.

Using our proprietary research database, The Capital Club has identified these 5 ASX dividend stocks as offering attractive dividend yields, and with the potential for capital appreciation in 2018, 2019 and beyond.

As an added bonus, all five companies pay fully franked dividends.

Looked at as a mini-portfolio, the average yield of these top 5 dividend shares to buy for 2018 is 5.5 per cent, or 7.9 per cent when grossed up for franking credits.

With the RBA cash rate stuck at just 1.5 per cent, that sure beats the returns on offer from term deposits, albeit stock market investing comes with more volatility and a higher level of risk.

BHP Billiton

BHP Billiton Limited (ASX:BHP) is in a sweet spot. Production is high, commodity prices are high, and it has five major projects under development. As an added bonus, a weaker Australian dollar should boost earnings.

This should translate into a bumper final BHP dividend.

The BHP share price is currently close to $34. The BHP full year dividend for FY18 is likely to be around $1.58, meaning BHP shares trade on a forecast fully franked dividend yield of 4.6 per cent, or 6.6 per cent when grossed up for franking credits.

Nine Entertainment

Nine Entertainment Co Holdings (ASX:NEC) is in an upgrade cycle, with strong television ratings momentum coupled with excellent progress on premium and digital TV having the potential of driving earnings upgrades into the future.

The Nine Entertainment share price is currently $2.50. According to Commsec, the FY18 full year dividend is forecast to be 10 cents per share, meaning Nine Entertainment shares trade on a forecast fully franked dividend yield of 4.0 per cent, or 5.7 per cent when grossed up for franking credits.

Update: On 26th July 2018, the day after this article was posted, the Nine share price fell 10 per cent after it announced it was merging with Fairfax.

Given the uncertainty, those readers looking for an alternative dividend share to buy could consider Tabcorp Holdings Limited (ASX:TAH).

The wagering and lottery provider with licences in all States except Western Australia has recently merged with Tatts Group.

With the Tabcorp share price is trading at $4.62, the shares trade on a fully franked dividend yield of 5.1 per cent, or 7.3 per cent when grossed up for franking credits.

Service Stream

Service Stream Limited (ASX:SSM) has a material growth opportunity ahead in providing installation and maintenance services for the national NBN rollout.

With the Service Stream share price currently trading at $1.60, the shares trade on a fully franked dividend yield of 3.75 per cent, or 5.4 per cent when grossed up for franking credits.

Bell Financial Group

Bell Financial Group Limited (ASX:BFG) provides stockbroking, investments and financial advisory services to private, institutional and corporate clients.

Earlier this month, the company advised it expects first half earnings of approximately $14 million before tax, a 65% increase on the previous corresponding period.

The Bell Financial share price is trading at $1.04. It has paid 7.5 cents in total dividends in the past 12 months, meaning the shares trade on a fully franked dividend yield of 7.2 per cent, or 10.3 per cent when grossed up for franking credits.

Villa World

Villa World Limited (ASX:VLW) is an ASX 300 listed residential property developer, specialising in contemporary Australian homes and land, in master planned communities in east coast States.

Earlier this month, the company said its FY18 profit was on target, saying sales momentum
has continued across the house and land sector. It said purchasers continue to gain unconditional finance, and as a result, Villa World will carry forward significant
pre-sales into FY19 and FY20.

The company is targeting a FY18 fully franked dividend of at least 18.5 cents per share. With the Villa World share price trading at $2.30, the company trades on a forecast fully franked dividend yield of 8.0 per cent, or 11.5 per cent when grossed up for franking credits.

Update: The Villa World share price fell 5.5 per cent to $2.17 on 26th July 2018 after the company said some sales will move from FY19 to FY20. It said it continues to target strong dividends for FY19.

Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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Bruce Jackson has 30 years of hands on investing experience. He is passionate about stock market investing, running his own portfolio and SMSF. His focus is on small cap growth stocks. You can contact Bruce at brucej@thecapitalclub.com.au