Media reports suggest market volatility on the ASX is driving self-managed super funds (SMSFs) to plum for managed funds rather than investing directly into shares.
That's a shame when many managed funds struggle to beat the market on a consistent basis over long periods of time. Most of those are closet index-huggers, who hold stocks almost representative of a much-lower cost index fund.
Firstly, SMSF trustees that are looking to invest in managed funds – make sure you look for those managers with solid track records and those that invest in their own funds. Research shows that those funds tend to post better returns than those with no skin in the game.
Secondly, for those SMSF trustees that still want to invest directly into high dividend stocks, here are four companies that I think are worthy contenders.
Insurance Australia Group Ltd (ASX: IAG)
The insurer has a good track record of paying consistent fully franked dividends, currently around 4.8% at a share price of $6.04. With a stable chock full of well-known brands, including NRMA Insurance, SGIO, SGIC, CGU and Swann Insurance, IAG has taken some baby steps into Asia.
The company tends to stick to what it knows – which is general insurance for things like cars, caravans, boats bikes and homes. That's good news for investors and IAG should be a good income stock for many years to come.
Flight Centre Travel Group Ltd (ASX: FLT)
Flight Centre is currently paying a 4.7% fully franked dividend, although franking may fall as the travel agent generates a larger portion of earnings from offshore. With no debt, sensible management who own a significant portion of the company alongside shareholders and growing revenues, Flight Centre has paid consistent dividends for many years. That is likely to continue – and grow over time too.
Tamawood Limited (ASX: TWD)
Tamawood is an Australian home builder with an exceptional dividend record. Currently paying a fully franked dividend yield of 7% at the current price of $3.55 – which grosses up to 10% – Tamawood is likely to maintain that yield far into the future. The good news is that with a market cap of just $90 million, the company has zero coverage by mainstream analysts and is therefore flying under the radar.
Having just reported its 2016 full year results, Tamawood could be worthy of adding to your watchlist.
G8 Education Ltd (ASX: GEM)
The childcare centre operator is currently paying a fully franked dividend yield of 6.7%. Even better is that the company pays its dividends out quarterly rather than every six months if you need regular income. With further potential to consolidate and grow its share of the childcare market, G8 Education has the ability to grow its dividends over time. That's an important consideration and could see you handily beating the returns from the market or managed funds.
