Investors’ search for high-yielding dividend stocks has been one of the large drivers behind the S&P/ASX 200 Index’s (Index: ^AXJO) (ASX: XJO) surge over the last 18 months, as interest rates and bond yields remained low and spot gold plummeted in value.
Benefiting from the trend were blue-chip companies such as Commonwealth Bank of Australia (ASX: CBA), Wesfarmers Ltd (ASX: WES) and Woolworths Limited (ASX: WOW). This saw shares become overpriced with little chance of delivering market-beating returns in the long run. Despite falling in price since the beginning of the year, I still believe there are better opportunities available to investors.
Don’t get me wrong – each of the above are still quality companies with bright futures and their dividends are still as attractive as ever, but there are other companies which offer generous dividends and possess greater growth potential. Here are three for you to consider:
Kathmandu Holdings Ltd (ASX: KMD): Although we will not find out how the outdoor adventure retailer trekked for its first six months of FY14 until late in March, the company will continue to grow both in physical store count and online. Online sales currently account for around 4% of total sales, although the company is aiming for above 10% within the next two years. Its push into the United Kingdom also presents as an opportunity for investors. It currently offers a fully franked yield just over 3.6%.
Amcor Limited (ASX: AMC): The global packaging company has been a solid performer for shareholders over the last five years, with shares having nearly tripled in value in that time. While the global economy has remained shaky, demand for the products that Amcor packages, including food and beverages and healthcare products, has remained far less volatile. Despite today reporting a 21.5% profit increase after a year of numerous acquisitions and the demerger of Orora Ltd (ASX: ORA), shares have fallen over 5.4%, giving investors a perfect opportunity to buy in. It currently yields 3.9%.
Village Roadshow Ltd (ASX: VRL): Like Amcor, the entertainment and media company has delivered fantastic returns over the last five years. Having climbed from below 80c to today’s price of $7.35 a share – a return of over 850%. While it already operated theme parks in Queensland and the US, the company also opened Wet ‘n’ Wild Sydney in December. It’s also focused on releasing between 6-8 movies per year, including The Lego Movie starring Will Ferrell. Although it has delivered enormous returns, I believe there are still gains to be recognised. Its 4% dividend yield is the icing on the cake.
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Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.