New Flash: The ASX is down…
Interest rates are just 2.5%…
The Australian dollar is down… and…
Inflation is 3%.
Together that all means shares are now cheaper, just as interest rates in cash accounts and term deposits, are dropping!
Therefore its time that more people looked to the sharemarket for dividend income and the chance of capital gains, over the long haul.
Below I've identified five stocks with fully franked dividends exceeding 5% (7.1% grossed-up), which put term deposits and savings accounts to shame. However, not all are standout buys at today's prices and so are probably best left on your watchlist.
1. Australia and New Zealand Banking Group (ASX: ANZ) is Australia's premier regional bank with growing exposure to Asian markets. Its shares have fallen 7% in the past five weeks but it still don't come cheap. It yields 5.5% fully franked.
2. Telstra Corporation Ltd's (ASX: TLS) share price has sunk 5% in the past month. Like ANZ, Telstra has plans to grow its international presence in coming years. However, at around $5.30 per share, its stock doesn't come cheap. So I'd leave it on a watchlist for now, despite it paying a 5.6% fully franked dividend.
3. Collins Foods Ltd (ASX: CKF) is an owner and operator of KFC, Sizzler and Snag Stand stores. Whilst the Sizzler business is currently being rebranded, analysts are expecting a jump in profit in coming years. At today's prices it yields 5.2% fully franked.
4. Hills Ltd (ASX: HIL) is a small-cap technology provider for the aged care and security sectors. Having dropped in price recently, shares currently yield 5.8% fully franked.
5. RCG Corporation Ltd (ASX: RCG) is the owner of The Athlete's Foot range of stores and exclusive distributor of footwear brands such as Saucony, Merrell and more. Shares currently yield 7.8% fully franked.
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If you've got your money tied-up in a low interest savings account, pay tax on the interest and have more than 10 years until you retire, you should seriously consider entering the stock market for the chance of capital gains and dividend income. Of the companies above, I think Collins Foods and RCG Corporation are the best buys at today's prices but I'd probably leave ANZ and Telstra on the watchlist, for now.
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