Investors in Australia and New Zealand Banking Group (ASX: ANZ), National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) are set to have their pockets lined as the trio payout their full-year dividends over the next two weeks.
With billions of dollars hitting bank accounts, savvy investors should be flush with cash and looking for new investment ideas to reinvest their funds.
CSL Limited (ASX: CSL) and Telstra Corporation Ltd (ASX: TLS) are two candidates I've selected to park my dividend money.
Here's why.
CSL
CSL is undeniably the pinnacle of healthcare stocks. Commanding a whopping $44 billion market capitalisation, the formerly government owned Commonwealth Serum Laboratories has flourished as a public company to become the leading producer of life-saving blood plasma, immunoglobulin, and vaccine products.
However, in recent times, CSL's shares have hit a speed bump as increased competition from second-largest industry player Baxter Inc., and teething problems with CSL's newly-acquired Seqirus business, puts a drag on earnings.
Nonetheless, with the star stock trading on a relatively cheap forward price-earnings of just under 25x, I see value to be had at current prices.
Given the potential upside if the US dollar moves higher on macroeconomic events (like oil prices, US interest rates and a Trump presidency), I believe investors should take advantage of CSL's sub-$100 price and buy today.
Telstra
Keeping on theme with companies that are former government owned assets, Telstra is one stock which deserves a closer look at its most recent close of $4.96.
Australia's leading telecommunications carrier has slumped over 16% since the start of 2015 as concerns over increased competition and stagnant industry growth rates place a ceiling on its share price.
Telstra's mature business, increased capital expenditure spend and floundering fixed-line revenues (which were traditionally high margin earners) have investors concerned for its growth prospects. This is arguably why the stock is down almost 15% since July this year.
Even so, Telstra is not resting on its laurels, pulling out all the stops to combat waning growth. As announced at its investor day presentation, management forecasts Telstra's network improvements and capital management strategy should derive earnings accretive benefits for shareholders until 2021.
Accordingly, the company should be able to eke out organic growth until then, making it one to own at current prices.
Foolish takeaway
Whilst neither CSL nor Telstra offer the promise of 10-fold gains, I can guarantee investors are unlikely to see wealth destruction like that experienced by shareholders of Bellamy's Australia Ltd (ASX: BAL) and Vocus Communications Limited (ASX: VOC).
As two of the largest components of the S&P/ASX 200 Index (ASX: XJO), CSL and Telstra are blue-chip defensive stocks that should perform throughout any economic cycle.
Accordingly, investors looking to spend their dividends earned from banks should look no further than CSL and Telstra, given their combination of growth, income, and relative safety.
