When it comes to dividend stocks, reliability is what you want.
And in determining whether or not a dividend stock is reliable, investors will usually seek out growing companies with a solid track record of paying excess cash to shareholders.
Buying quality dividend stocks when they're out of favour with the market and holding for the long-term can be an extremely rewarding strategy for passive investors.
Below, I've listed three quality ASX dividend stocks that could be worthy of closer inspection at today's prices, following recent share price declines.
- Collection House Limited (ASX: CLH) – Collection House is a leading debt collection company. Collection House, like all debt collectors, is perceived as 'counter-cyclical', meaning it operates better when the economy is in the doldrums. However, it should be noted that although there may be some merit in this argument, it's not so straightforward. There is a lag between purchasing debt ledgers and receiving the monies owed in tough economic times. Therefore, with the economy expected to go through a rough patch, Collection House's near-term outlook may be a little shaky, hence the falling share price. Nonetheless, over the long-term it looks to be a sound investment in my opinion. Moreover, analysts polled by Morningstar expect a dividend equivalent to a yield of 4.6% fully franked in the year ahead.
- Retail Food Group Limited (ASX: RFG) – Retail Food Group is the name behind Donut King, Gloria Jeans, Crust Pizza and much more. In light of recent allegations concerning poor practice by the franchisees of 7-11 and Pizza Hut, Retail Food's share price dropped as low as $4. Despite a modest recovery to their current level of $4.40, Retail Food Group's shares are forecast to yield a fully franked dividend of 5.9% in the next year – that's 8.4% grossed up.
- Australia and New Zealand Banking Group (ASX: ANZ) – Shares of ANZ, Australia's fourth largest bank, are down 13% in six months. Economic concerns out of China and the potential for a slower Australian market, are likely catalysts for the fall. While I believe the near-term outlook for ANZ could be a little tough, the bank's exposure to China affords it a point of differentiation to that of its domestically-focused competitors and offers an avenue for profit growth over the long-term. Despite these concerns the consensus of analysts polled by Morningstar suggests it will increase its dividend in the coming year. At $1.83 per share, ANZ's forecast dividend represents a yield of 6.6% fully franked.
Buy, Hold or Sell?
At today's prices, I think both Collection House and Retail Food are worthy of a closer inspection by savvy long-term investors. However, ANZ could be staring down the barrel of below-average profit growth for the foreseeable future. Like all banks, its share price is highly cyclical to the economy. Therefore, I suggest investors hold off buying ANZ shares, for now at least.
