Australia's population is ageing at an alarming rate, and it is only now that some individuals are wondering whether or not they have enough money stored away to support them through retirement. Of course, that's why compulsory superannuation contributions were enforced, but these alone are unlikely to be sufficient to allow retirees to live as comfortably as they were when they were working.
One of the best ways you can overcome this problem is by investing in solid, high-yielding dividend stocks. Not only can they provide a regular flow of income (often at a far greater rate than you'd be offered in a term deposit or savings account), but they also introduce the possibility of fantastic capital gains when held for the long term.
What stocks NOT to buy…
Typically, investors would assume that the big four banks, Telstra Corporation Ltd (ASX: TLS), Woolworths Limited (ASX: WOW) or Wesfarmers Ltd (ASX: WES) would be the best options for solid dividends. Sure, their dividends are certainly appealing and there is no questioning the quality of the companies themselves, but right now they do not present as good value. Until such time as their shares retreat in price, there are far greater alternatives for you to consider.
3 ultimate stocks to buy right now
Instead, these three companies have, for one reason or another, been overlooked by the broader market and are thus presenting as value prospects today.
RCG Corporation Ltd (ASX: RCG) is one such company. RCG which owns The Athlete's Foot shoe chain in Australia, is a much smaller company than those mentioned above which is the likeliest reason it has been overlooked. Superior customer service levels allow the company to maintain high margins which have enabled the business to deliver impressive returns in recent years. As it stands, the stock offers a whopping 11.1% dividend when grossed-up for franking credits.
Another company to consider is Coca-Cola Amatil Ltd (ASX: CCL). While I'm sure you're familiar with the business (or the products it sells, at the very least), you might not be aware that its stock price has fallen dramatically as a result of a number of business or economic headwinds. However, I believe these issues will be retained to the near-term while the long-term outlook appears brighter. A strong balance sheet has enabled the company to retain a great dividend (albeit slightly lower than last year's), which is expected to be 45.5 cents per share (cps) in FY15. That's a yield of 5.2%, franked to 75%.
Finally, Insurance Australia Group Ltd (ASX: IAG) is another solid bet for your portfolio. Given that it is one of Australia's largest insurance companies and offers decent growth prospects, I find it difficult to believe that it is still trading on a forecast P/E ratio of just 12.4. While I believe that could be quite underdone, the stock is offering an enormous 6.2% dividend, fully franked. Grossed up, that equates to an unbelievable 8.9%.
Dividends are an incredible way for investors to boost their wealth in the long run – particularly when they come coupled with fantastic growth potential. While the companies mentioned above are all presenting as excellent opportunities today, there is one more stock which could be an even greater buy. Read on below to find out more…
