With interest rates at record lows and seemingly unlikely to recover in the near term, investors search for income is becoming frantic. Yet there are still plenty of viable high-yielding options in today's market.
Here are three I would buy today with $10,000:
Telstra Corporation Ltd (ASX: TLS) – a theoretical $4,000
Telstra's case is aided by the recent release of its annual results in which investors saw a modest increase to revenues and profits as well as a surge in its market share in the crucial mobile market. With the ongoing rollout of the NBN and a rock-solid balance sheet as well as a number of growth opportunities, Telstra is a dividend stalwart for many Australian investors for a reason.
Its 5.6% fully franked dividend yield looks highly sustainable, and although there are some potential headwinds (addressed in the linked article above) I would be comfortable buying shares in Telstra today.
G8 Education Ltd (ASX: TLS) – a theoretical $3,000
Unlike Telstra, G8 Education has not yet released its half-year results to the market – but they're expected out soon, and I recently wrote on a number of key things investors will want to watch when the company reports. I'd suggest holding off your purchase until after the report to see how things match up, but at its most recent results G8 had a stable balance sheet and was generating a significant amount of free cash flow, which it can use for acquisitions, dividends, or debt reduction.
With the company still controlling a miniscule percentage of Australia's childcare market, it has plenty of room for growth by acquisition. Besides which, the company looks very cheap at 14 times earnings, and if it can successfully make a handful of incremental improvements to its occupancy and operating costs this would really add legs to its acquisition strategy. G8's 6.7% fully franked dividend looks highly attractive today.
Flight Centre Travel Group Ltd (ASX: FLT) – a theoretical $3,000
Flight Centre shares jumped in the past week after a recent announcement by FlexiGroup Limited (ASX: FXL) about a new deal that will see FlexiGroup offering interest-free holiday products to Flight Centre customers. Unlikely to be material to Flight Centre's earnings in the near term, the recent price rise nevertheless knocked some of the gloss off Flight Centre's dividend – which remains a respectable 4.4% fully franked.
The group benefits from tailwinds in terms of rising global travel, while recent times have shown that a lower Australian dollar isn't much of a headwind. In addition to its remarkably resilient bricks-and-mortar stores Flight Centre also offers an increasing variety of specialty travel products – plus it carries no debt, and has a stack of cash. A strong contender for a position in any dividend investor's portfolio.
