Are Australia’s highest dividend companies worth buying?

Across September and October, many Australian bank accounts will receive a share of up to $40 billion in dividends from ASX-listed companies. For income investors, this is a critical time, and franking forms part of their calculations.

Buying a company specifically for its dividend has long formed a part of many strategies. It is the reason why a company like Telstra, even in its hardest periods, remained popular due to high payouts. It's also why some expensive companies still attract interest – like Commonwealth Bank with its 3.07% dividend yield in 2026 (and $5.05 per share, fully franked).

Dividend yield (and the actual dividend per share) are a primary focus for income investors, so much so that they may forget to ask themselves an important question: is this company actually worth buying?

The 'highest yields' on the ASX

It’s tempting to focus on dollar amounts of dividends, but the dividend yield provides investors a better picture of the return they make on their investment.

After all, a dividend of $1 per share might sound great, until you factor that you paid $300 for that share (i.e. your yield is 0.33%). That same $1 dividend is a better return if it was from a company you paid $50 for and therefore your dividend yield is 2%.

This might tempt investors to pick companies purely based on the highest yield – this too is a risky strategy. After all, falling prices can mean a higher yield and the company may be struggling, or a lower yield may reflect rising share prices and the fundamentals may actually be strong.

The below table shows the top 10 companies ranked by highest dividend yield* from Market Index – I’ve excluded listed investment vehicles, REITs and ETFs from the list.

Source: Market Index, 19 October 2026. 

The first thing to note is that these companies are not your standard big company dividend plays. All of them have faced challenges in the last few years, such as the funds outflow from GQG Partners or poor performance at Regal Partners, which can push the dividend yield higher as the price falls.

Investors considering whether these are worth buying will need to look beyond the dividend yield to consider the deeper fundamentals and outlooks for these companies. For some, the uncertainty is quite high.

Of the above companies, only Atlas Arteria (ASX: ALX) is covered in Market Index’s broker consensus tool with a Hold rating. Generally, infrastructure like toll roads can offer consistent earnings for investors, it is worth highlighting that the board of Atlas Arteria is no longer committing to 40 cents per share dividends in future.

The highest yield is attributed to Helia Group (ASX: HLI), a provider of lenders mortgage insurance in Australia, with an extraordinary headline dividend yield of 24%.

You could say it has had a mixed few years, losing a large Commonwealth Bank contract in 2025 and nearly losing ING Bank Australia (it won back the business with a new agreement in June 2026).

It is also facing a challenging property market, with rising Australian interest rates and falling residential property prices. Helia holds strong capital reserves above requirements and paid special dividends in 2026, despite lower earnings.

Morningstar notes that Helia is highly sensitive to Australian economic conditions and its investment portfolio is conservatively managed, with good corporate governance.

“A scenario of falling GDP, higher unemployment, a reduction in the availability of credit, and a drop in house prices is likely to have the compounding impact of simultaneously reducing Helia’s premiums and increasing its incurred claims,” Nathan Zaia, Senior Equity Analyst for Morningstar, said.

Helia ranks #3 on Market Index’s Stock Stores and you can read further analysis of it in this article by Livewire's Kerry Sun.

As with the other stocks, it is not necessarily a buy on the basis of its dividend yield and there’s plenty to consider when it comes to the outlook for the company.

The index top players

Typical dividend favourites include names like Commonwealth Bank, BHP and Telstra – all of which offer franking credits.

Incidentally, these all feature in the top 10 of the FTSE Australia High Dividend Yield Index. Where this index differs from a pure look at the top dividend yield is that it considers higher 12-month forecast dividends relative to other ASX-listed companies and focuses on the largest 200 companies on the ASX. Index weightings are based from highest to lowest forecast yield.

This can help offset where yield looks high simply due to price falls in the previous 12 months and can factor company earnings outlook.

The current top 10 in the index are shown in the below table, along with the current price, forward dividend yield and broker consensus rating (taken from Market Index) and Morningstar’s value assessment.

Vanguard Australian Shares High Yield ETF (ASX: VHY) data used as a proxy for the FTSE Australia High Dividend Yield Index. Price, forward dividend yield and broker consensus from Market Index. Morningstar Fair Value Assessment taken from Morningstar Investor. All data as at 19 October 2026.

These are all large-cap companies and most of the list is overvalued by Morningstar’s value assessment or rank as a Hold in Market Index’s broker consensus.

Top position BHP (ASX: BHP) just delivered a bumper dividend return and its investments in copper are paying off.

Morningstar analysts anticipate demand for iron ore to fall in the longer term, while BHP will continue to benefit from strength in copper prices.

“A focus on debt repayment after the 2015-16 downturn, modest ongoing capital expenditure requirements, current stronger commodity prices, and earnings see BHP in strong financial shape,” says Morningstar’s Jon Mills, noting that the balance sheet is sound and he likes BHP’s approach to shareholder distributions.

UBS pointed to BHP as one of its top picks off the back of copper returns and has set a price target of $62 – it is currently trading below this price. Ausbil’s Michael Price also highlighted the long-term tailwinds for metals and critical minerals as a benefit to BHP, which is the largest overweight position in his portfolio.

Turning to the last of the top 10, CSL (ASX: CSL) has staged an extraordinary rally in recent times – it was even significantly undervalued and a popular buy for fund managers for a period.

Wavestone Capital’s Charles Story suggested in a recent episode of Buy Hold Sell that CSL will "be able to demonstrate high single digit EPS growth going forward and there’s further opportunity for a PE rerate.”

Morningstar notes that CSL continues to benefit from its large established infrastructure network dedicated to plasma collection and fractionation, but notes uncertainty over CSL’s ability to commercialise its R&D pipeline due to its expansion into gene therapy and newer recombinants. It highlights a solid balance sheet and fair investment efficacy.

Banks under pressure

The big four banks have largely been on the nose with analysts for some time now, with pressures from inflation, rising rates and falling property weighing on future earnings. Commonwealth Bank (ASX: CBA) in particular, has come under fire as being expensive.

At Livewire Live in September, Dougal Maple-Brown predicted that Commonwealth Bank could halve from its highs and he is underweight Australian banks. In an episode of Buy Hold Sell earlier this month, Blackwattle Investment Partners’ Joseph Koh viewed it as a sell on the basis of valuations, while Perpetual Asset Management Australia’s Sean Roger viewed it as a Hold given strong management, franchise and forward positioning in technology.

While viewing Commonwealth Bank as overvalued currently, Morningstar still views it as well positioned for a challenging market, with analysts noting that it holds the largest market share in Australia.

“The bank’s large loan and deposit books continue to deliver robust net fee income, and with the increasing importance of scale to cope with changes in technology and regulation, Commonwealth Bank should consistently earn returns above its cost of equity through the cycle,” says Morningstar’s Zaia.

On the flip side, ANZ (ASX: ANZ) ranks as a Buy in Market Index’s broker consensus – though still rated as overvalued by Morningstar.

Elston Asset Management’s Joe McCarthy highlighted ANZ’s cost reduction strategies and progress on the Suncorp integration as positioning ANZ as the most attractive of the big four back in August reporting season, but views it as a Hold.

Similar to Commonwealth Bank, Morningstar believe the loans and deposits books, and a wide moat from cost advantages and switching costs should help ANZ continue to earn returns above the cost of equity through the cycle.

Sitting just outside the big four, Macquarie Group (ASX: MQG) stands as a Strong Buy in the Market Index broker consensus tool.

FNArena’s Rudi Filapek-Vandyck pointed to Macquarie Group recently as a high conviction pick, favouring their high level of activity in the energy sector, growing market share and less capital-intensive business model and that the business is currently going through a period of reinvention with a new incoming CEO.

Morningstar notes that Macquarie Group continues to benefit from a competitive advantage in infrastructure and real asset investments – though investors should note that only months ago, concerns were expressed by employees over governance and other challenges to the Macquarie board in the infrastructure and energy division. 

Macquarie is Australia's leading investment bank, with a market share exceeding 25%. It is also expanding its lending business. Back in July, Macquarie was assigned an Exemplary Morningstar Capital Allocation Rating on the basis of its balance sheet, investment decisions and execution, and shareholder distributions.

Worth buying?

Readers will notice a big difference in fundamentals when it comes to the highest dividend yield, versus the factors like forecast dividend yield in the largest companies used by the index.

Fundamentals matter – value does too. The general principle of investing for income is good quality at fair value. One of the biggest concerns about buying ‘expensive’ stocks is the risk of capital loss outweighing dividends or getting a yield trap.

Investors need to make an assessment of fair value for any given stock, rather than blindly chasing yield. 

Morningstar’s assessment of fair value is one metric, but there are many. For example, while Morningstar views BHP as overvalued, UBS’ view of fair value and price target sees the big Australian as undervalued.

Other considerations include total return (dividend income – including franking credits – plus capital price return), sustainability of dividends, and what a particular company offers within a broader portfolio. Telstra, for example, might offer a defensive tilt alongside high yield.

Watch the outlook for a company and its sector as part of your evaluation of whether or not a company is worth buying.

Remember if you like a company’s fundamentals but are concerned about today’s valuations, that doesn’t necessarily mean it can never earn a place in your portfolio. It might mean you add it to a watchlist and determine what valuation would make it attractive to you. Think of it as 'Worth buying, but not today'.

What stocks are you watching to add to your income portfolio? Let me know in the comments

* The dividend yield is calculated by adding up all dividends paid in the last 12 months (including special dividends), then dividing the value by the current share price. All dividend data is calculated by Market Index.