3 high-yielding dividend stocks ripe for the plucking

Consider buying Flight Centre Travel Group Ltd (ASX:FLT), G8 Education Ltd (ASX:GEM), and Retail Food Group Limited (ASX:RFG).

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Market research shows that dividends make up a big chunk of investor returns over time, especially when reinvested. Interest rates are low. They could be headed lower. Put the three together and you'd be crazy to look past a good dividend-paying stock, especially when they're as good value as these three are.

Flight Centre Travel Group Ltd (ASX: FLT) has been hit by a wave of investor bearishness from a number of quarters, partly over the increase in online competition and probably also over fears the 'Brexit' would impact the company's global business. The latter is a largely spurious risk in my opinion, as changes in the Australian dollar haven't had much impact on Australians heading overseas, and this is likely to be true in the UK also given how cheap travel to most of Europe is there.

The pessimism does create a unique buying opportunity for investors, and shares are now below even the $37 I considered a bargain not too long ago. Flight Centre has shown its resilience to online competition over the past 10 years and with one of the best balance sheets in the Australian market, its 4.8% fully franked dividend looks secure.

G8 Education Ltd (ASX: GEM) by contrast is a highly leveraged beast, although the reliability of earnings from its childcare centres and its quarterly 6% fully franked dividend make it worth owning. Management has been steadily improving the operating performance of G8's centres, and a shift away from aggressive acquisitions should see an improvement in the company's financial position, further reassuring investors.

Its dividend appears sustainable and with the upcoming annual report, investors will be able to get a better look at its prospects, which could be a catalyst for a re-rating in price.

Retail Food Group Limited (ASX: RFG) was one of the few Australian shares unaffected by the recent 'Brexit' plunge, no doubt because most of its earnings are made locally. Despite that, shares are still not expensive – at 16 times underlying earnings, it's in line with G8 Education and around the market average. Retail Food Group's 4.8% fully franked dividend is underpinned by the reliability of its coffee franchises, and a joint-venture partnership in China as well as a cost-savings program that could both contribute significantly to earnings in the coming years.

Retail Food now controls an estimated 30% of the Australian coffee market, which should be sufficient to start to give it cost and competitive advantages, further strengthening the investment case.

Motley Fool contributor Sean O'Neill owns shares of Flight Centre Travel Group Limited, G8 Education Limited, and Retail Food Group Limited. The Motley Fool Australia owns shares of Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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