RBA interest rate SHOCK: Attention all SMSFs, and dividend lovers

With interest rates almost certain to be SLASHED again, ASX dividend paying stocks could again be the HUGE winners

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Many investors, during bull markets, say they can't wait for a pullback so they can buy cheaper shares.

Well, Motley Fool readers, today is your chance to put the theory into action.

Overnight, the Dow added 300 points.

Here in Australia, yesterday the S&P/ASX 200 Index made a stunning recovery, finishing the day in positive territory after at one stage looking like it would plunge back below 5,000.

(As an aside, Deutsche Bank has a target for the ASX 200 to 5,600 by the end of 2015. They are clearly expecting the market to literally TAKE OFF in the coming weeks.)

Yesterday, I went shopping again, snapping up yet another ASX stock that has fallen 20% over the last three months, despite recently reporting results that were well ahead of expectations.

In short, the shares have fallen for no good reason… and I'm not about to look a gift horse in the mouth!

Now, you can treat this bout of share market volatility 3 ways…

1) Believe the doomsters and pessimists, sell in a fit of panic and head for the hills with your tail between your legs. Lock in your losses now, and wait until markets move higher before moving back in.

With the greatest respect, just like slavishly following stop losses, doing this is virtually guaranteed to lose you money.

2) Do nothing… and miss out on some of today's compelling bargains on offer.

As a reminder, even after the rally of the past couple of days, the S&P/ASX 200 Index is still down 17% from its April high.

Wouldn't you be rather buying NOW than a few months ago, when every man and his dog were falling over themselves to buy shares in the "can't lose" big four banks?

Do you want to be one of those people who, in a few weeks time when everything inevitably calms down again, regrets not buying NOW, when shares were cheap?

3) Steadily and methodically put money to work in the share market now, taking advantage of the cheap prices and high fully franked dividend yields on offer, while they still last.

Every week, or even every month, buying shares in quality ASX companies trading at what will likely turn out to be artificially and temporary low prices.

I'm firmly in the third camp… especially as, after yesterday's awful GDP numbers, financial markets are now pricing in a 91% chance of another cut in official interest rates by the RBA BEFORE the end of THIS year.

Back in February this year, when the RBA unexpectedly cut interest rates, the ASX soared to a 7-month high.

When the RBA almost certainly cuts again, it could give the ASX a MASSIVE shot in the arm, sending it significantly higher.

I'm not hanging around to wait for the interest rates to be slashed on my term deposits again. I'm buying shares NOW.

And besides, with many ASX companies now trading on fully franked dividend yields of 5% or more, by comparison to leaving your money in the bank, the returns from shares for income-hungry investors and SMSF's are utterly compelling.

Take Telstra Corporation Ltd (ASX: TLS) for example.

Its share price has quietly fallen 13% over the past month, whereupon it now trades on a fully franked dividend yield of 5.4%. When franking credits are included, Telstra's gross yield is a very attractive 7.7%!

It doesn't take a rocket scientist to see how the market, and high yielding shares in particular, could TAKE OFF in advance of, and after, the next RBA interest rate cut… something the financial markets are suggesting is a virtual certainty.

I already own Telstra… likely along with many readers of this column. Its one of the most widely held stocks trading on the whole ASX.

My guess is you, like me, are looking for new, different and exciting dividend-paying stocks to add to your diversified portfolio.

Stocks that pay juicy fully franked dividends, AND have the very real potential of their share price jumping significantly higher on the back of a market re-rating and business growth.

Look no further. Andrew Page, our resident dividend expert, has already identified a number of such companies for subscribers to his Motley Fool Dividend Investor strictly members-only newsletter service.

As I look down his list of current buy recommendations, I see a number of growth companies trading on fully franked dividend yields of 5% or more, including one that recently increased its dividend by a whopping 50%!

And here's the kicker — many of these companies, courtesy of the recent market wobbles, are now trading a share prices significantly lower than they were just a few short weeks ago.

With the RBA looking almost certain to again cut interest rates this year, AND with the ASX still in correction mode, PLUS not forgetting Deutsche Bank's year-end prediction of 5,600 for the market, the timing could be perfect.

And here's another reason why the timing may be perfect…

This month, many companies will be paying their dividends to shareholders.

By buying NOW, you'll not only potentially benefit from a re-rating of the stock market, but you'll also guarantee you'll receive some much needed income in the form of dividend payments, and also LOCK IN those beautiful franking credits, potentially setting you and/or your SMSF up to receive a TAX REFUND.

Click here now to join Andrew Page's Motley Fool Dividend Investor at my low price of just $99.

In today's choppy market, it just could be the best investment you EVER make.

Of the companies mentioned above, Bruce Jackson has an interest in Telstra.

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