Rio Tinto Limited
Despite its bottom line falling by 19.4% in the last year, Rio Tinto Limited (ASX: RIO) continues to increase its shareholder payouts. In fact, the iron ore miner has increased dividends at an annualised rate of 39.2% over the last five years and, when combined with a share price that has been under severe pressure for many months, this means that it now yields a very impressive (and fully franked) 4.3%.
Certainly, future levels of profitability could be somewhat uncertain and Rio Tinto's share price is likely to remain volatile. However, with dividends being covered 1.4x by profit, the company seems to have sufficient headroom to enable it to continue to grow shareholder payouts over the medium term.
Ramsay Health Care Limited
On the face of it, Ramsay Health Care Limited (ASX: RHC) is an unappealing income stock. After all, it currently yields a paltry 1.4%, which is just a third of the yield of the ASX and would cause most income-seeking investors to look elsewhere.
However, Ramsay could become a more attractive income stock than many investors realise. That's because, unlike many of its index peers that come with high headline yields, Ramsay is a defensive company that also offers growth prospects. This means that not only are its dividends reliable, they also have the potential to rise at a rapid rate.
In fact, over the next two years Ramsay is expected to increase dividends per share at an annualised rate of 17% and, for long term investors, it could prove to be a consistent income stock.
Wesfarmers Ltd
With shares in Wesfarmers Ltd (ASX: WES) having fallen by 5% in the last week, they now offer a better yield than previously. Certainly, the future performance of the business is somewhat uncertain, with the Aussie supermarket sector set to endure a more price competitive period. However, Wesfarmers remains diversified and defensive with a yield of 4.5% (fully franked).
Furthermore, Wesfarmers also appears to offer good value for money relative to the wider food and staples retailing sector, with it having a price to book (P/B) ratio of 1.9 versus 2.25 for the sector. It could prove to be a sound income stock over the long term.
