Renowned ANZ (ASX: ANZ) chief economist Ivan Colhoun last month said that, as a result of the bank's research, it wasn't expecting a move on interest rates until 2015. Contrary to many economist' expectations, it believes the next move will be up.
That means term deposits and interest-bearing accounts are likely to return less than 3% (especially once you consider inflation) for the next 12 months – at least! So now is the time to start positioning yourself for dividend stocks and other high yielding investments.
However it's not only about securing a good income stream; it's important that investors take time, analyse the stock and buy at a good price, thus minimising the downside risk and potential for capital losses.
Securing your financial freedom starts when you're young but it's possibly not until you retire that you'll realise just how much you could have benefitted from actively investing earlier in life. Once you get to retirement, however, there is one company many Australians have chosen to provide a consistent income stream. Challenger (ASX: CGF) pays a 3.5% dividend, trades on cheap multiples and is well-positioned to take advantage of a retiring baby boomer population.
Another core stock that is likely to benefit from an aging population is NIB Holdings (ASX: NHF). NIB pays a 4.4% dividend fully franked and Morningstar are predicting consistent earnings per share growth from the insurance provider in coming years.
One stock that has been popular amongst cyclical investors and those looking to take advantage of a rise in consumer and business confidence is Myer (ASX: MYR). Myer trades on earnings of 12 and pays a 6.8% dividend fully franked! The Australian Bureau of Statistics recently published its September retail trade data, which showed stronger sales throughout much of eastern Australia. This trend is likely to continue and Myer stands to benefit.
Finding a good dividend stock in the current market is tough because low interest rates have already sent the market over 20% higher as investors went in search of the best dividend shares. However, if you turn over enough stones, you're likely to find what you're looking for.