The RBA's decision to reduce interest rates to 2% is clearly bad news for savers. After all, it means that the return on cash balances has fallen even further and, even though inflation was just 1.3% in the first quarter of the year, the real return on savings is now rather modest.
And, looking ahead, it would be of little surprise for interest rates to fall even further. Certainly, there is the risk of a housing bubble, but the RBA may decide that this is a risk worth taking with commodity prices being low, unemployment relatively high and there being concerns about the medium term performance of the Aussie economy.
As such, things could get worse before they get better for savers. These three stocks though could help you to benefit from (rather than suffer from) lower interest rates.
Telstra Corporation Ltd
With Telstra Corporation Ltd (ASX: TLS) aiming to derive at least a third of its revenue from Asia by 2020, the telecoms company clearly offers strong growth prospects. However, it could also benefit from a weaker Aussie dollar over the medium term, which could provide an additional boost to its bottom line.
Furthermore, Telstra has a yield of 4.7% (fully franked) which is likely to appeal to income-seeking investors and improving sentiment could continue to push the company's share price upwards after a gain of 22% in one year. And, with Telstra forecast to increase dividends per share by 3.7% per annum over the next two years and its dividend being covered 1.2 times by profit, it offers sustainable income prospects.
Amcor Limited
Even though Amcor Limited (ASX: AMC) has posted a total return of 34% in the last year, its earnings are likely to gain a boost from a weaker Aussie dollar. And, with Amcor continuing to expand abroad, as evidenced by its takeover of Souza Cruz for $US30m, it remains one of the most prominent internationally exposed companies on the ASX.
Furthermore, Amcor also offers a forward yield of 4.1%, with dividends appearing to be relatively sustainable as evidenced by a payout ratio that is expected to be around 77% in financial year 2016. In addition, Amcor offers good value for money, with it having a price to sales (P/S) ratio of 1.55 versus 1.63 for the ASX and 2.40 for the wider materials sector.
Crown Resorts Ltd
Savers may not receive a significantly higher income from buying a slice of Crown Resorts Ltd (ASX: CWN). After all, the entertainment and gaming company currently yields a partially franked 2.8% and, while dividends are expected to rise by 5.3% per annum over the next two years, it still puts the company on a forward yield of 3.1%.
However, a weaker Aussie dollar is likely to attract more tourists to the country, which could prove to be a real fillip for Crown Resorts' earnings. This, plus a currency boost from its international operations could make a Crown Resorts a top notch turnaround play after it has posted a negative total return of 15% 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.
