Australia is one of the top countries for high dividend yields for stocks. Dividend yields are high in Australia due to the concept of franking which basically prevents dual taxation of dividends to both the company and the individual investor receiving the dividend.

When compared to other asset classes also Australian stocks have better yields. For instance, bonds yields less than 1% while stocks pay 5.7%. Similarly the 1 year rate on bank term deposit is just 1.65%.

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Source: Plunging bond yields & weak share markets amidst talk of recession – what does it mean for investors? by Dr Shane Oliver, AMP Capital

Dr.Shane notes in the above piece that stocks are even cheap relative to bonds due to recent price declines. From the article:

Finally, the decline in bond yields is making shares relatively cheap. The gap of 4.8% between the grossed-up dividend yield on Australian shares of 5.7% and the Australian 10-year bond yield of 0.94% is at a record high. Similarly, the gap between the grossed-up dividend yield and bank term deposit rates of less than 2% is very wide. In other words, relative to bonds and bank deposits shares are very cheap which should see them attract investor flows providing we are right and recession is avoided.