Although the Australian stock market is currently firing on all cylinders, with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) having recently set a new five-and-a-half year high, it is still imperative that you maintain a strong foundation to your portfolio. With the big four banks, biopharmaceutical behemoth CSL Limited (ASX: CSL), and retail giants Wesfarmers Ltd (ASX: WES) and Woolworths Limited (ASX: WOW) all trading at excessive prices, you might be wondering exactly which companies you should be buying. Here are three you should strongly consider:
Telstra Corporation Ltd (ASX: TLS)
While the telco's shares have rallied strongly in recent years, they still have plenty to offer long-term Foolish investors. With a 5.5% fully franked dividend on offer, the company continues to attract customers from rivals thanks to its superior product packages and customer service levels. Although it has admitted that mobile growth will inevitably slow, it will still continue to benefit from society's increasing reliance on broadband and smartphone services. Shares are currently trading at $5.22.
Coca-Cola Amatil Ltd (ASX: CCL)
Unlike Telstra, the beverage distributor has not been performing well for investors with its shares down 40% since last May. Profits have been declining due to the strong Australian dollar, concerns over its growth prospects in Indonesia, as well as its declining margins which can be attributed to aggressive discounting by primary rival Schweppes. However, under the new management of Alison Watkins, the company should overcome these short-term issues to deliver patient investors with fantastic returns for years to come. Priced at $9.11, the stock has a trailing dividend yield of 5.5%, partially franked (75%).
NIB Holdings Limited (ASX: NHF)
NIB is a leading provider of health insurance which is set to benefit from the government's revised budget, with more and more Australians expected to take out private health insurance. The company boasts a solid balance sheet, a strong management team and an attractive outlook, whereby it is anticipating profit to be between $73 and $80 million for 2014. You should not be deterred by the company's recent run-up in price (now sitting at $2.95), but should instead focus on the long-term potential of the group. The 3.5% fully franked dividend on offer is simply the icing on the cake.
