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Beyond banks: Two great stocks for dividend lovers

Most Australian investors expect solid dividend payments from the country’s large banks, including Commonwealth Bank (ASX: CBA), with its 5% yield, and Westpac (ASX: WPC), which also pays a yield in the 5% range.

But if your portfolio is already well kitted out with bank shares, you may want to look to the two companies below for additional income.

Idea #1: Tabcorp 

Tabcorp (ASX: TAH) is a Melbourne-headquartered gambling and leisure products company with a market cap of about $2.5 billion. Its four business segments include Wagering, Media & International, Gaming, and Keno.

As my colleague Mike King recently put it: “Think of Tabcorp as a utility company with a firm handhold on the Australian gambling pipeline (at least in NSW, Queensland and Victoria), with practically guaranteed revenues over the next 10-12 years, unless management do something completely mad, or Australians suddenly change their gambling habits.”

The company’s dividend yield is in the 6.5% range, fully franked, and shares are trading at a forgiving P/E ratio of just 7.2.

Idea #2: APA Group

APA Group (ASX: APA), a Sydney-based gas infrastructure company and asset manager, offers a dividend yield over 5%, unfranked. The company’s sales and net income have posted strong growth over the last five years. In 2008, revenue came in at $878 million and net income at $67 million. By 2012, revenue had grown to $1.16 billion and net income to nearly $277 million.

While the share price has already risen nearly 30% this year, the company is trading for just 16 times earnings, a reasonable multiple given the company’s consistent revenue streams and modest growth prospects going forward.

BONUS idea: Telstra

Telstra’s fully franked 28 cent dividend is legendary, and chances are that even if you don’t own the shares directly, your superannuation fund does.

But with its share price skyrocketing over the past year, is Telstra past its prime? Find out a top analyst’s take on this compelling question now, FREE. Simply click here for our brand-new FREE report: “Is It Time to Sell Telstra?”

More reading

The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.

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