With some pundits speculating that the Reserve Bank of Australia (RBA) will be forced to lower a cash rate already at historic lows in an effort to jump start a stalling domestic economy, investor demand for high yielding, fully franked dividend stocks is likely to continue.
With the exception of a hot property market many other areas of the Australian economy remain tepid. Indeed capital spending, retail spending and consumer sentiment all continue to appear lethargic.
Given the economic headwinds and the continual unwind from the resources boom, investors can expect a low interest rate environment to continue for some time yet making dividends an appealing alternative.
For income-seeking investors, the recent market volatility has created some appealing entry points into high yield stocks.
Lower share prices, all else remaining equal means higher dividend yields.
Here are five to consider:
- IOOF Holdings Limited (ASX: IFL) – the share price of the financial services firm is down 16% in the past six months. The dividend (according to data from Morningstar) is forecast to rise to 57.7 cents per share (cps) in the current financial year (FY), placing the stock on a juicy fully franked yield of 6.6%.
- Suncorp Group Ltd (ASX: SUN) – the stock is down 9% in three months and with the dividend forecast to increase to 89.5 cps this FY, the bank and insurance company's stock offers a forecast fully franked yield of 7.1%.
- Platinum Asset Management Limited (ASX: PTM) – down nearly 17% in the past half year and with a forecast dividend of 38.4 cps, the stock of this leading global fund manager is trading on a fully franked yield of 5.7%.
- Telstra Corporation Ltd (ASX: TLS) – down 9% in three months this perennial favourite of self-managed super fund (SMSF) investors is expected to raise its dividend to 31.5 cps this FY, implying a fully franked yield of 5.6%.
- Primary Health Care Limited (ASX: PRY) – has slumped over 30% in the last six months and the dividend is also expected to slip this year to 17.7 cps. Even at this lower pay out level the stock still offers shareholders a forecast fully franked yield of 4.8%.
