Between May and June, we saw a number of high-yielding blue chips fall away in value at an even quicker rate than they had climbed over the previous 12 months. Bank shares suddenly looked like bargains compared to their recent highs whilst other defensives such as Telstra (ASX: TLS) or the two supermarket behemoths Wesfarmers (ASX: WES) and Woolworths (ASX: WOW) also fell away.
Now, global markets are breathing a sigh of relief as Ben Bernanke, the Chairman of the US Federal Reserve, continues to suggest that quantitative easing will not end until there are clear signs the economy can sustain itself without the extra support. On Wednesday last week, he stated that he had no intentions of reducing quantitative easing until "there's traction in the broader economy," as CMC Markets chief market strategist Michael McCarthy put it.
It now seems that investors are seeing the attraction in high-yielding stocks again. Whilst the banks (and many other blue chips) still seem very attractive based on their future growth potential, below are three companies that present as good opportunities to add to your portfolio.
Shopping centre operator Westfield Group (ASX: WDC) is one of Australia's largest companies with a market capitalisation of $24.7 billion. Following the global financial crisis, the company recognised the need to divest in poorly performing properties to instead redevelop and expand on its better performing complexes.
Last week, a leading analyst in the property sector put forward his belief that the company's new World Trade Center complex would become the company's most productive asset, highlighting the benefits of these redevelopment projects. Whilst the company has only properly penetrated Australia, New Zealand, the US and UK, there is plenty of future growth potential. With shares currently valued at around $11.40, the company offers a dividend yield of 4.4% and continues to increase its shareholder returns.
Department store Myer (ASX: MYR) is a company that many investors remain cautious of due to subdued consumer confidence in recent times as well as the threat that online retailing poses to the business. However, the company offers a 7.7% dividend yield and is trading at a 23% discount compared to its level in April. With increasingly large signs that Australia will avoid a recession, it is likely that consumer confidence will pick up for the years ahead which would likely benefit Myer greatly.
NIB Holdings (ASX: NHF) also offers an attractive yield of 4.4% and is in an excellent position to deliver market beating returns over the long term. NIB is a national provider of various insurance products to over 900,000 customers and, as it grows its market share, its profits also look set to boost.
Foolish takeaway
Although high yields sound attractive, it is important to consider each company's long-term potential. For instance, while the banks offer a good yield, they are unlikely to deliver market beating returns over the course of the next five to 10 years. The companies mentioned above offer solid returns whilst also standing a good chance to increase in value substantially over time.
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Motley Fool contributor Ryan Newman owns shares in NIB Holdings out of the companies mentioned in this article.
