Telstra Corporation Ltd (ASX: TLS) is one of the best dividend stocks on the ASX.
A dominant market position, a big pile of cash and tailwinds at its back means investors can rest assured that its current 4.8% fully franked dividend yield is sustainable and will therefore likely be paid for many years into the future.
Unfortunately, as Motley Fool writer Tim McArthur recently wrote, Telstra's share price appears to have gotten ahead of its profit performance.
This means, investors who choose to buy now may be unwittingly putting their money at risk by buying Telstra shares. Even if it is a first-class dividend stock the risk of capital loss (share prices falling) is very real.
That's why Telstra isn't in my portfolio right now (although it's firmly on my watchlist!).
Instead, I've recently added some less obvious dividend stock ideas which I think are reasonably priced and offer more upside potential over the next three to five years.
- M2 Group Ltd (ASX: MTU) is one such idea. It is a retailer of telecommunications services, owning brands such as Dodo, Eftel and Primus. It is also pushing into the complementary area of utility retailing through Dodo Power & Gas, Insurance, and more. At today's prices it's forecast to pay a 2.9% fully franked dividend.
- Coca-Cola Amatil Ltd (ASX: CCL) is Australia's distributor of Coca-Cola and Beam-branded beverages. Its share price was hit hard in 2013 and again in 2014 as profit downgrades became a regular feature of its bi-annual reports. However the worst now appears to be behind it and management are targeting a return to profit growth in the near future. It's tipped to pay a dividend of 4.15% partially franked in the next 12 months.
Should you buy Coca-Cola Amatil today?
