The top priority for many share market investors is generating income and that's no surprise given the paltry returns offered by the banks on term deposits and other cash equivalents.
The number one rule when seeking income stocks is to buy quality companies at attractive valuations.
For investors looking towards retirement it's also preferable to focus on larger businesses with moats and defensive revenues as these are much more likely to ride out economic storms to keep paying growing dividend streams in the years ahead.
Here are 5 businesses to consider for those after an income over 5% per year.
National Australia Bank Ltd. (ASX: NAB) has recently retreated to a much more reasonable valuation and importantly has made real progress in divesting its underperforming UK assets. Today's buyers would be able to ride any upside from its strategic exit out of the UK banking market and enjoy a juicy fully franked 6.2% dividend to boot.
Insurance Australia Group Ltd (ASX: IAG) recently had legendary investor Warren Buffett join the share register via Berkshire Hathaway's $500 million investment at around $5.37 per share. Today the stock sells for $5.10 at a discount to what Buffett apparently considered good value, with a 5.6% fully franked dividend. Analysts' forecasts are for the dividend to remain stable out to 2018.
Iress Ltd (ASX: IRE) is a $1.5 billion financial software and technology business with significant overseas exposure, a blue-chip client base and sticky revenues. Today the stock sells for $9.44 having dropped nearly 12% through 2015, with analysts' forecasts for dividends totaling 47 cents per share in FY16 it offers a potential 5% partially franked yield in the year ahead.
Telstra Corporation Ltd (ASX: TLS) is famous for its dividend with good reason and assuming it pays out 31 cents per share in FY16 the stock offers a fully franked 5.53% yield at today's price of $5.60. Given its leverage to the digital future and strong cash flows it looks a solid addition to income-seekers' portfolios.
Scentre Group Ltd (ASX: SCG) operates the Australia and New Zealand located Westfield shopping centres and aims to provide its shareholders with steadily growing income streams. The group's malls are market leaders in prime trade areas, anchored by long-term tenancies with Australia's most popular retailers. Selling for $3.94 the stock yields 5.2%, with analysts' forecasts for the dividend to keep climbing out to 2017.
