The slight pullback in the S&P/ASX 200 Index (ASX: XJO) (Index: ^XJO) during September does have its bright side. Blue-chip stocks that investors love for dividend income are offering bigger yields at lower prices.
Below are three blue-chip stocks with generous yields that have sold off to attractive levels, but is it time to snap any of them up? I think at least one is possibly ready.
Transurban Group (ASX: TCL), the toll road and tunnel infrastructure operator, is down about 8% from its $8.32 high in early September. The stock is yielding 4.8% partially franked, but its price-earnings (PE) ratio is 39. That's really high for an infrastructure developer and manager. However, it recently acquired a portfolio of five toll roads and tunnels in Brisbane, so its average revenue and earnings growth are forecast to be high over the next 2 – 3 years. I like the company, but it is better to hold off and wait for a lower entry price.
Woodside Petroleum Limited (ASX: WPL) hit a 52-week high of $44.23 in late August, but over the last month it declined 8.4% to $40.53. The energy producer is getting good cash flows from its offshore LNG projects and is looking for new ones to invest in with a multi-billion dollar war chest available. Since investors aren't certain of its next steps, they're being cautious. I think Woodside's story is improving. It has announced several new projects recently and is moving into energy trading for LNG contracts. The stock has an attractive yield of 5.7% fully franked, which is as high as some of the big four banks. I think it has become a good buying opportunity recently, but it may slip in share price a little more before finding a firm bottom.
Australia and New Zealand Banking Group (ASX: ANZ) is paying a very generous 5.6% fully franked yield at around $30.50 a share. Since early September it has slipped down about 9%. It is priced at a 12 PE, similar to Commonwealth Bank of Australia (ASX: CBA) and National Australia Bank Ltd (ASX: NAB). Earnings are tipped to generally rise in the near future, which is encouraging. Still, I would like the stock come down further to around $29 to clear most of the price rise since February and show better value.
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