According to many financial commentators, a bleak outlook for the Australian economy in 2015 is paving the way for lower interest rates.
In fact some leading economists at the big banks are forecasting two rate cuts in 2015. Meaning, returns from term deposits and savings accounts are likely to get even worse.
Meanwhile a number of Australian companies are expected to pay handsome dividend yields.
For example Coca-Cola Amatil Ltd (ASX: CCL), Ardent Leisure Group (ASX: AAD) and National Australia Bank Ltd (ASX: NAB) offer big dividends yet look cheap and deserve a spot on your watchlist. Deciding whether to buy them is another question entirely.
Coca-Cola Amatil is the exclusive distributor of Coca-Cola to Australia and select neighbouring countries. It also has the right to distribute Beam branded products until 2023. Despite its reputation as a reliable dividend payer, Coca-Cola Amatil shares look cheap after a vicious selloff in 2014. Whilst there could be some merit in the drop, it looks to be overdone. At today's discount share price, it's also tipped to offer a dividend of 4.4% with partial franking.
Ardent Leisure is the owner of Dreamworld and White Water World theme parks on the Gold Coast, AMF and Kingpin Bowling and Goodlife Health Clubs. Over in the United States, its Main Event business is kicking goals for shareholders and could be a significant contributor to group revenues in coming years. At today's price, there appears to be a healthy margin of safety built in and it's forecast to pay a 5% unfranked dividend in the next year.
For even bigger dividends, NAB looks appealing with a yield of 6% fully franked. However before diving into the stock, investors should consider its troubled past, growth outlook for the future and current valuation. Despite the shares trading on a forecast P/E ratio of just 12, investors are advised to keep their distance.
