It's fair to say investors are loving their dividend stocks right now – and why wouldn't they be?
With government bonds and term deposits offering next to nothing in the way of returns, investors are frantically flocking towards the market's high-yield stocks – and in many cases, with complete disregard for value, or even logic.
Just look at Commonwealth Bank of Australia (ASX: CBA) as a perfect example. Just yesterday, the company announced an 8% increase to its interim dividend, promising investors $1.98 per share. The stock is trading within 3% of its all-time high at $91.64 because investors want a piece of its 4.6%, fully franked dividend yield.
The same goes for numerous other high-yield blue chip legends, including Telstra Corporation Ltd (ASX: TLS) and Westpac Banking Corp (ASX: WBC), which are both trading near all-time or multi-year highs.
Indeed, the market's fascination with dividends has pushed the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) to its highest level in more than six years, and it looks like there is plenty of money still to be made.
But high-yielding dividend stocks aren't the only way to get rich in this market. It's February, and the majority of the companies listed on the ASX are delivering their interim or full-year profits, giving investors a glimpse of their recent performance and expectations of what is to come. While there are still more than two weeks remaining in the earnings season, there have already been some fantastic results from companies – some of which you may never have heard of.
Company #1: A Legal Eagle
Law firm Slater & Gordon Limited (ASX: SGH) delivered a stunning report on Tuesday this week, reporting a half-year net profit of $33.7 million on the back of $245.3 million in revenues, both up 46.5% and 37.6% compared to the prior corresponding period, respectively. While its Australian personal injury practice and legal services are seeing steady growth, its real excitement machine is its roll-up style expansion into the much larger UK market, which you can read more about here.
Right now, the shares are changing hands for $7.53 and are up nearly 14% since announcing its results. Nonetheless, the stock still appears to be good value and could still deliver excellent long-term results for the patient investor.
Company #2: The Nice Debt Collector
Traditionally, debt collectors have been seen as maniacs knocking on a person's door for collection on their dues, no matter how big or small the debt. That's by no means the case nowadays – debt collection can actually be an incredibly profitable business.
Small-cap collection agency, Collection House Limited (ASX: CLH), is living proof of that theory, having just reported a 19% increase in half-year profits and a 22.7% jump in revenues, adding to its already impressive track record. The company makes money by collecting debts on behalf of clients whilst also buying debts from clients on which it can make a very handsome profit if it is successful in the collection process. The company is growing strongly – a trend which I expect will continue for a number of years – and offers a very nice 4% dividend yield (fully franked), which is simply the icing on the cake.
Company #3: A Loving Retailer
If you've never heard of Lovisa Holdings Ltd (ASX: LOV), you can be sure you're not the only one. The fast fashion jewellery retailer debuted on the ASX barely two months ago, but has made significant progress since. While its shares are up 22.5% since the day of its float, it has also reaffirmed it is on target to achieve its prospectus forecasts of 33% sales growth compared to the same period last year.
While investors would be wise to avoid many of Australia's retail stocks, Lovisa could prove to be one of the odd exceptions. It said its profit margin for December was a whopping 80.2% – which is almost unheard of – while its like-for-like sales are growing strongly, too.
