Investing in a diversified portfolio of high quality, dividend paying stocks is one of my favourite ways of generating passive income.
Here are three stocks that I think will help you generate income:
Spark New Zealand Ltd (ASX: SPK), the New Zealand-based telco keeps growing its mobile market share and has a relatively strong balance sheet that can be used for future capital investment. Spark's sub-brands Big Pipe, Blue Sky, Slingshot and Skinny mobile are also quite popular with price sensitive consumers and backpackers in New Zealand. The company is trading at a PE ratio of 16 and a dividend yield of 6.9%.
Brambles Limited (ASX: BXB), which operates in more than 50 countries around the world, has got a supply chain network to envy. Its status as the largest global provider of pallet and reusable plastic crate pooling services provides it with a strong competitive advantage and there is plenty of room for growth, particularly in emerging markets. I wouldn't be worried about its PE ratio of 19 and dividend yield of 2.9% which may appear low. In my view, it is a good quality stock that can help anchor a diversified portfolio.
Ramsay Health Care Limited Fully Paid Ord. Shrs (ASX: RHC), the private healthcare operator, is still over 20% down from its $81 share price high in September 2016 but I think the long term fundamentals remain strong and this represents a buying opportunity. Ramsay remains Australia's largest private hospital operator with operations in the United Kingdom, France, Indonesia, and Malaysia. Despite a current dividend yield of 2.2%, it still has a 17% 10-year average annual dividend growth rate and I think there is plenty of room for growth in the long term.
In addition to the stocks above, I like companies that have high dividend yields and are expected to continue increasing their dividend payments at a sustainable payout ratio. This has a compounding effect and can really grow your wealth over the long term. This report prepared by our team of experts identifies the ASX companies that are set to raise dividends.
