Although interest rates were kept on hold at 2.25% recently by the RBA, a quick glance at other developed nations across the globe shows that they could head south at a rapid rate. Take, for example, the UK, where interest rates have stood at just 0.5% for over six years and, with inflation being zero over there, they could be lowered even further.
So while the interest you are currently receiving on your cash balances may be above inflation, the status quo may not last over the medium term. In other words, unless commodity price pressures ease and the Aussie economy starts to pick up, it is likely that the RBA could slash interest rates by a considerable amount.
With that in mind, here are three stocks that offer excellent dividend prospects and could be the answer to low interest rates on your savings.
Coca-Cola Amatil Ltd
Turning any company around is never an easy task and, as shown recently with Coca-Cola Amatil Ltd (ASX: CCL), there are inevitably a number of lumps and bumps on the road to recovery. So, the challenges faced by the company should not put off potential investors in the company, since its cost savings remain on-track and it is now expected to grow its bottom line by 5.4% per annum over the next two years.
In addition, Coca-Cola Amatil is forecast to increase its dividends per share by 3.4% per annum during the next two years, and this puts it on a forward yield of 3.9%. And, with Coca-Cola Amatil having a beta of just 0.56, it could offer a less volatile shareholder experience should the ASX endure an uncertain period in the medium term.
QBE Insurance Group Ltd
Also in the midst of a turnaround is QBE Insurance Group Ltd (ASX: QBE) and, encouragingly for its investors, it recently confirmed full-year guidance. This is somewhat unusual for QBE, since in recent years it has tended to downgrade its own guidance but, with its rationalisation strategy starting to have a major impact on the consistency of the business, QBE's yield of 3.4% looks good.
And, with QBE forecast to increase dividends per share at an annualised rate of 17.1% in the next two years, it could be yielding as much as 4.5% in 2016. This, when combined with a price to earnings growth (PEG) ratio of just 0.73, makes QBE a relatively appealing growth and income stock.
Australia and New Zealand Banking Group
Even though there is a considerable amount of uncertainty regarding the growth profile of China, the Asian economy continues to have excellent long term prospects for the banking sector. One company that is taking advantage of this is Australia and New Zealand Banking Group (ASX: ANZ), with its Super Regional Strategy set to provide the bank with excellent long-term growth prospects.
And, in the meantime, ANZ offers its investors a stunning yield of 5.1%, which is well covered by profit at 1.5 times. This shows that ANZ has sufficient headroom when making its shareholder payouts and, with dividends per share set to rise at an annualised rate of 5% during the next two years, now seems to be a great time to buy a slice of it.
