Bond fund manager Pimco says the Reserve Bank of Australia will be forced to cut interest rates, "until we see some meaningful signs of a growth hand-off from the mining sector." This is good news for savvy stock market investors, who have already taken advantage of surging stocks prices and huge dividend yields in the past 12 months.
Another cut would, however, cause more investors go searching for fully franked dividend yields of their own. Here are five beaten-down dividend plays that you could add to your portfolio today.
1. Ausdrill (ASX: ASL)
Ausdrill is a diversified, end-to-end mining services company that has operations in both Australia and Africa. Recently the stock price went as high as $1.87 but has fallen to around $1.35 – giving it a yield of 8.4% fully franked and P/E of just 4.5!
2. Metcash (ASX: MTS)
Playing in the league of giants, Metcash's IGA supermarkets have been up against it in recent years. However, the company has been resilient, stubbornly increasing earnings per share (although the company believes it may drift sideways in coming years as the price war between Wesfarmers' Coles and Woolworths continues). At current prices it yields 8% fully franked and trades on average weighted earnings around 11.
3. Telstra (ASX: TLS)
Telstra is the hammer for any serious DIY income investor. Rock-solid dividend yields and modest growth are what investors get when they buy part of this iconic Australian company. At current prices it yields a fully franked dividend of 5.8%.
4. Ruralco Holdings (ASX: RHL)
Heading into small-cap territory, Ruralco is one name that appears in almost every major country town, whether it's on real estate signs or agricultural products. With a market capitalisation of $188 million, modest debt and a 5.9% fully franked dividend, Ruralco could be a potential takeover target in the near future.
5. Data#3 (ASX: DTL)
A diversified technology play, Data#3 has rewarded investors very handsomely over the past 10 years, increasing from around $0.18 to $1.20 today but the good news is it could still go further. The company specialises in licensing, people and infrastructure solutions. At current prices, it yields 5.9% fully franked.
6. BC Iron (ASX: BCI)
Investors who have been brave enough to venture into small resources stocks have been rewarded time and again with tremendous gains. Since 2009, the stock has increased nearly 2,000%, but that's not all. It currently plays an 8.8% dividend fully franked!
Foolish investors know a good buying opportunity isn't determined by the dividend alone. Dividends are only the cherry on top of the icing on the cake. Savvy investors know the company's fundamentals, management, valuation, product and future capital gains are more important.
If you want one stock that's got it all, discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."
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Motley Fool contributor Owen Raszkiewicz owns shares in Metcash, Ausdrill, Data#3 and Ruralco holdings.