2014 was an interesting year for Australia's big dividend-paying stocks. The big four banks all fared reasonably well, but the performance of dividend-focussed exchange traded funds on the ASX varied wildly.
The iShares S&P/ASX High Dividend Index Fund (ASX: IHD) fell 13%, versus a 1.5% gain for the S&P/ASX 200 (INDEXASX: XJO), while the Russell High Dividend Australian Shares ETF (ASX: RDV) rose roughly 3% and the SPDR MSCI Australia Select High Dividend Yield Fund (ASX: SYI) was flat (excluding the return to shareholders).
2015 Income Strategy
Analysts are still predicting that there will soon come a time when dividend stocks stop outperforming cyclical or growth stocks. 2015 could be that year and so investors should ensure that companies which pay a handsome dividend yield have some growth prospects going forward.
Here are eight companies that I believe have offer a reasonable combination of growth and income:
| Name | Last Price | Forward Yield |
| Insurance Australia Group Limited (ASX: IAG) | $6.44 | 6.2% |
| Suncorp Group Ltd (ASX: SUN) | $14.26 | 6.7% |
| National Australia Bank Ltd. (ASX: NAB) | $34.23 | 6.0% |
| Hills Ltd (ASX: HIL) | $1.18 | 6.3% |
| DUET Group (ASX: DUE) | $2.44 | 7.1% |
| Infratil Ltd. (ASX: IFZ) | $2.60 | 7.4% |
| STW Communications Group Ltd. (ASX: SGN) | $0.89 | 9.6% |
| Cardno Limited (ASX: CDD) | $3.43 | 8.2% |
Of these, I think Cardno and STW Communications likely offer the greatest share price appreciation, while NAB and Suncorp group are the most likely to retain their payouts over the longer term.
An interesting option is Infratil. The company owns and operates businesses in the energy, airport and public transport sectors. The company's biggest investment is in listed power company TrustPower, which is New Zealand's fifth-largest power company, and Infratil recently purchased 50% of retirement home operator RetireAustralia. The stock is extremely thinly traded but offers a seemingly reliable yield and reasonable growth prospects through further investments.
Finally, for investors looking for a company that combines both technology and the healthcare industry, it's hard to go past Hills Ltd. The group offers a range of products to retirement homes and aged care facilities, which can improve efficiency and customer care. These types of companies are perfect for long term investors like The Motley Fool.
