It was obvious where investors were looking this week, after the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) posted a loss of 3% for the week. It was the worst performance since June 2013, according to The Age.
But the one stock that made every post a winner was Telstra Corporation Ltd (ASX: TLS). The giant telco gained 2.5% this week to hit a 13-and-a-half year high of $6.22. As a result, the company's dividend yield has dropped to 4.7%, although still fully franked.
Grossed up, that's 6.7% before tax – more than double the average term deposit rates. And with markets around the world roiling, investors are clearly seeking the safety of dividend stocks, with Telstra the largest and most well-known of them.
An unexpected bonus for many investors could be the telco raising its dividend this financial year. Analysts are forecasting a 30 cents dividend for the full year, 0.5 cents above last year.
Telstra's not the only dividend payer of course. Many SMSF investors have huge holdings of the big four bank shares, but there are concerns about the performance of the banks in the year ahead. The outcome of the Murray Inquiry, rising unemployment, and offshore investors seeking safer assets, could see the banks sold off.
It may have already started with Commonwealth Bank of Australia (ASX: CBA) dropping 2.9%, Westpac Banking Corp (ASX: WBC) down 1.9%, Australia and New Zealand Banking Group (ASX: ANZ) sliding 3.5% and National Australia Bank (ASX: NAB) dropping 2.5% this week.
So beyond Telstra and the big four banks, investors seeking the safety of large dividend players may want to consider Insurance Australia Group (ASX: IAG), with its 6.2% fully franked yield, Suncorp Group Ltd (ASX: SUN) with 6.7% and the much-maligned Coca-Cola Amatil Ltd (ASX: CCL) with its 4.4% yield.
The added bonus for investors is that with those yields, only a modicum of growth is needed to beat the market's average annual gains.
