5 stocks for great dividends

Chasing high yielding stocks can also provide growth, here are five to get you on your way.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Throughout the early months of 2013, investors were chasing high yielding stocks in anticipation of fully franked yields and mild growth. The prospect of lowering interest rates pushed money from term deposits and bank accounts into the local stock market. If you were in early enough, it may have paid off.

Although it took months to build up the stock market it took only a few weeks to bring it down. It was bad for those who delayed the transition from bank accounts to bank stocks and some copped a 20% loss in the first six weeks. However, there is some good news. With great companies now reduced in price, not only do you get a bargain for your money, you also get high yields. Here are five dividend plays that also offer room for growth.

Banking stocks were the blue chips that got hit the hardest in recent months. The big four dropped significantly despite increased profits. ANZ (ASX: ANZ) currently pays a 5.1% fully franked dividend and has a solid long term upside.

With the exception of mining services, retailers have got hit harder than most stocks in the past two years. However, the relentless lack of optimism has meant investors are able to take advantage of some great yields. Myer (ASX: MYR) sports a low price-to-earnings ratio and a huge 8% fully franked yield.

As Telstra (ASX: TLS) followed the S&P/ASX 200 (ASX: XJO)(Index: ^AXJO) down, its legendary dividend yield has grown. Even though you could have got a better deal on its full-year 28 cent dividend when it was only $2.60, at current prices, it's still an attractive 5.9% fully franked.

Recently, a brick-and-mortar retailer impressed the market with a healthy 6.5% growth despite horrible market conditions and increased competition. To complement Metcash's (ASX: MTS) solid growth prospects is a current 8% dividend yield that is one of the best on the market.

Last but not least is IMF Australia (ASX: IMF), a diversified financial that provides capital for large lawsuits in Australia and through its wholly owned subsidiary in the US. It's not every day a small cap pays a 5.7% fully franked dividend — perhaps investors could buy now and hold forever.

Foolish takeaway

Buying stocks based purely on dividends and price-to-earnings ratios has proven time and again to be foolish. Instead, investors should focus on combining growth prospects, good balance sheets, a healthy industry and good management to give the company the best chances of a positive return on investment. Take time and find the right stocks, after all patience doesn't lose you money.

The Australian Financial Review says "good quality Australian shares that have a long history of paying dividends are a real alternative to a term deposit." Get "3 Stocks for the Great Dividend Boom" in our special FREE report. Click here now to find out the names, stock symbols, and full research for our three favourite income ideas, all completely free!

More reading


Motley Fool contributor Owen Raszkiewicz owns shares in IMF Australia, Metcash, Myer and ANZ.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »