Suncorp Group Ltd
With Aussie interest rates set to stay low throughout 2015 (and even fall below the current 2.5% level), companies that offer great yields over the next couple of years could find their shares being bid up by income-hungry investors. One such stock is Suncorp Group Ltd (ASX: SUN) which, as well as a fully franked 5.9% yield, also has superb dividend growth prospects.
For example, over the next two years Suncorp is forecast to increase dividends per share at an annualised rate of 13.6%. That's almost six times the current rate of inflation and means that in financial year 2016, Suncorp could be yielding as much as 6.3%.
It also has a price to earnings growth (PEG) ratio of just 0.46, which seems to offer growth at a reasonable price as well as highly enticing income prospects. As such, it could be a winning investment this year.
Ramsay Health Care Limited
Although Ramsay Health Care Limited (ASX: RHC) currently yields just 1.5%, the biggest private hospital operator in Australia has been very generous when it comes to dividend growth in recent years. For example, over the last 10 years it has increased dividends per share at an annualised rate of 17.4%, which is an incredibly fast rate of growth.
However, in the same time period Ramsay's share price has risen by 735%, thereby compressing its yield. Looking ahead, more share price growth could be on offer. That's because Ramsay has a very defensive business model that is largely unaffected (in the short term at least) by high unemployment and sluggish GDP growth.
So, with the future being highly uncertain for the ASX, investors may flock to safer stocks, such as Ramsay, and this could be the catalyst to push its share price higher.
Coca-Cola Amatil Ltd
Also offering excellent defensive qualities is Coca-Cola Amatil Ltd (ASX: CCL). Certainly, its business is in the midst of a major transformation, with a new management team likely to attempt to reduce costs, make the company more efficient and look abroad for higher growth rates. However, with such a strong brand name and a relatively high degree of customer loyalty, Coca-Cola Amatil's sales figures should hold up relatively well even during a challenging year for the wider economy.
And, with a track record of delivering upbeat earnings (the company's bottom line has risen at an annualised rate of 5.9% over the last 10 years), investors may start to value Coca-Cola Amatil rather more highly moving forward than they have done in the past. As such, it could prove to be a strong performer this year and turn around the share price decline that has seen its valuation fall by 20% in the last year.
Of course, finding the best stocks for the long term is a tough ask – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
