As most readers will be aware, the Board of the Reserve Bank of Australia (RBA) handed down its Monetary Policy Decision this week which saw Australia's official cash rate remain unchanged at a lowly 2.25%.
Low interest rates are really a two-edged sword. For many retirees who prefer the safety of cash, low rates have a painfully negative effect on their income; meanwhile, for investors and borrowers, lower rates have a positive effect on asset values and make interest payments less burdensome.
Whether you are a retiree who feels forced to move out of cash and into higher-yielding assets such as equities, or an investor who is looking for the next juicy dividend stock to buy, it's important to remember that picking income stocks is about determining future earnings and dividend growth.
One area which ticks the boxes for dividends is the banking sector. All the banks (including the regionals) look attractive at present – particularly National Australia Bank Ltd. (ASX: NAB) – when it comes to fully franked yields most investors already have significant portfolio exposure to this sector.
So where else can investors buy today that offer fully franked growing yields?
Here are four companies that when grossed-up for franking credits offer yields more than double the returns of the official RBA cash rate that:
JB Hi-Fi Limited (ASX: JBH) is forecast to grow earnings and dividends over the next two full year reporting seasons. Based on forecasts (provided by Morningstar) for financial year (FY) 2016, the stock is trading on a fully franked (FF) yield of 4.6%.
Super Retail Group Ltd (ASX: SUL) is forecast to grow earnings and dividends between FY 2015 and FY 2016. With a forecast FF dividend in FY 2016 of 41.7 cents per share (cps), the stock trades on a forecast yield of 4%.
ASX Ltd Ltd (ASX: ASX) is forecast to grow its earnings and dividends over the next two reporting seasons to 191.6 cps in FY 2016. Based on this forecast from Morningstar the stock has a FF yield of 4.6%.
Wesfarmers Ltd (ASX: WES) is forecast to grow earnings and dividends over the next two years. Based on Morningstar's data for FY 2016, the stock is trading on a forecast yield of 5.1%.
