We're already past the halfway point this financial year, so it might be a good time to look over the portfolio to see if your returns are what they should be. It there are a few that had promise, yet didn't pan out the way you expected, it may be time to jettison them and make room for stocks with fresher stories.
I've gone on a hunt for companies offering high-dividend yields with a kicker – something that is going to drive them forward to make the future dividend larger.
The only way you get larger dividends is for the earnings per share to go up. Lock in yield when it is relatively high and the real yield – your total portfolio return – will rise from the share price increases and the greater dividend income.
Mirvac Group (ASX: MGR) 5.60% yield
The stock satisfies that spot covering the rising property market. As a real estate investment manager and developer, you get the long-term stable returns from the investment side and when housing construction is expanding, home sales volumes and prices deliver the short-to-mid-term profits.
It also does infrastructure, commercial and industrial construction, so when those particular property markets are booming the company does well. The current 5.6% dividend yield will go hand-in-hand with solid share price gains. Total dividends for 2013 were 8.7 cents per share, up 53.5% from 2012 and the property market upswing has just started.
National Australia Bank Ltd. (ASX: NAB) 5.72% yield
One of the big four banks, it has a strong reputation for being a leader in business banking and has been working away at taking loan market share from the other big banks.
Recently it challenged them again by dropping its three and four-year fixed rate home loan interest rates by 0.05%. With variable rates no longer being cut, homeowners and house buyers may become interested in locking a lower rate.
Its 5.72% yield is the highest amongst the banks and it will see more loan business to drive EPS and dividends from the housing market expansion, as well as companies needing to manage and grow their own business.
APA Group (ASX: APA) 5.89% yield
This investor and operator of energy infrastructure handles more than half of the natural gas used annually in Australia. The soon to be commencing LNG export industry will add more capacity and need for gas transportation. This major transporter of energy supplies will have more reason to grow.
Steadily growing EPS over the past three years set the pace for higher dividends. As an investment trust its distributions usually have a payout ratio of more than 150% of EPS.
Foolish takeaway
Dividend income can sometimes make up 30% – 40% of your portfolio returns, so strong, high-paying stocks will set you right. We can get our best yields when we buy quality companies because we can be more assured of future returns.
