The Reserve Bank of Australia this week confirmed that interest rates would remain at their low of 2.5% for the foreseeable future, so the market's attraction to high-yielding dividend stocks is unlikely to come to a halt any time soon.
With many of the nation's larger and more popular dividend stocks trading on excessive valuations, it's worth considering alternatives with big growth prospects. Like the five listed below.
- Village Roadshow Ltd (ASX: VRL): After years of strong returns, the entertainment and media group's shares have taken a breather recently and are now trading 12% below their 52-week high. Village Roadshow operates popular Australian theme parks such as Wet 'n' Wild, Movie World and Sea World, while it is also expanding into the Asian market. Forecasts suggest Village Roadshow will pay a total dividend of 31.9 cents a share in FY15 fully franked, giving it a grossed up yield of 6.2%.
- M2 Group Ltd (ASX: MTU): While most telco investors would immediately buy Telstra Corporation Ltd (ASX: TLS), more value could be recognised by buying M2 Group instead. The stock has grown strongly via a number of strategic acquisitions and will now turn its attention towards more organic growth. It offers a grossed up 4.9% dividend yield.
- NIB Holdings Limited (ASX: NHF): The private health insurer is well positioned to benefit from a number of trends, including the aging Australian population and increased reliance on the private health system. Couple that with its grossed up 4.6% yield and you've got yourself a winning combination.
- Super Retail Group Ltd (ASX: SUL): The owner of brands like Supercheap Auto, Ray's Outdoors and Rebel delivered an impressive set of annual results recently and anticipates trading conditions will continue to improve as the year goes on. It also increased its fully franked dividend to 40 cents per share, giving it a grossed up yield of 6.1%.
- JB Hi-Fi Limited (ASX: JBH): Unlike Super Retail Group, the market didn't take too kindly to JB Hi-Fi's results which saw the stock fall to a fresh one-year low. While conditions could remain tough over the next 12 months, I expect its new 'Home' format stores will provide an avenue for growth in the years to come. In addition it offers a grossed up yield of 6.8%, which makes now a reasonable time to buy
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While all of the companies mentioned above offer solid yields, there is one other company that you need to know about.
