It's the first week of August.
That means it's reporting season.
In the next month, investors can expect the majority of their companies to report their full year or interim results.
If a company fails to meet the market's implicit growth expectations, its stock price will be sold down. Conversely, if it surpasses expectations, the stock will likely jump higher.
Obviously, if you're looking to buy shares in early August, you'll need to prepare yourself for heightened amounts of volatility.
Three companies I'll be watching closely this reporting season are Woolworths Limited (ASX: WOW), Flight Centre Travel Group Ltd (ASX: FLT), and Telstra Corporation Ltd (ASX: TLS).
Each company offers a big dividend and has been in the media spotlight over the past year, for various reasons.
Woolworths – Forecast annual dividend yield: 4.85% fully franked
Despite a big and reliable dividend yield, and falling official interest rates, shares of Woolworths have tumbled more than 20% over the past year. Comments on the growth of Aldi, its price war with Coles, a CEO appointment and growth within its Masters Home Improvement business will all be watched closely when it reports later this month. Currently trading at fair value, any positive market commentary could see Woolworths' stock price jump.
Flight Centre Travel Group – Forecast annual dividend yield: 4.21% fully franked
Following a huge single-day selloff in June, on the back of its apparent loss of 0.3% market share, Flight Centre shares have moved into a compelling valuation range. Indeed, the share price fall has brought out the bears, who believe online operators will disrupt traditional bricks-and-mortar travel agents. However, although I doubt it will happen anytime soon, even if discount operators disrupt flight Centre, its current valuation is compelling.
Telstra – Forecast annual dividend yield: 4.66% fully franked
As one of the 'go-to' dividend stocks on the ASX, Telstra has developed a reputation for being one of the most reliable income plays for sharemarket investors looking to offset lower returns from fixed income. A market leader in telecommunications and related applications locally, the $79 billion giant is now seeking growth in Asia. Although its success in Asia is hard to predict and carries a unique set of risks – Telstra has previously said its goal is to derive one third of revenues from the region by 2020.
Buy, hold or sell?
I think each of these three stocks deserve a spot on watchlists today. However, for new money Flight Centre is my pick of the bunch. I'm erring on the side of caution with Telstra and Woolworths shares, and would prefer to see how they report before buying in.
