Aussies love dividends. Perhaps it’s the franking credits and tax incentives for those investing inside of a self-managed superannuation fund (SMSF). Or maybe we like them just because they provide a hefty bi-annual income stream.
Whatever your reason for liking dividends, you’ll agree their icing on the cake when combined with capital gains. Finding companies which offer both is a recipe for success.
However, every investor knows it’s important to diversify holdings. Having some stocks from different industries in different countries is a tested way to mitigate risk. The problem is however, international shares rarely provide the sort of dividends local investors are used to.
But it’s not all bad news, Australian investors can still get a slice of a company with international exposure, which pays a hefty dividend, on the local market. One such company which pays a modest but rising dividend payment is Village Roadshow Limited (ASX: VRL). Many readers would be familiar with its cinemas and films but are perhaps unaware of its ownership of key tourist destinations like Warner Bros. Movie World, Sea World, Australian Outback Spectacular and Wet’n’Wild Water World on the Gold Coast. It pays a growing 4.4% dividend fully franked.
4.4% might not seem like much compared to the dividends of the big banks. Despite their handsome capital gains in the past two years, investors can still grab some bank shares and receive great dividends. Australia and New Zealand Banking Group (ASX: ANZ) provides the most diversified earnings of the big four, with more and more revenue coming from the group’s Asian expansion. At current prices it yields 5.2% fully franked.
Fellow banking heavyweight, Macquarie Group Limited (ASX: MQG) is also undertaking significant growth overseas. As the global economy and worldwide markets rebound following the GFC, so too has Macquarie’s earnings and share price. This morning the group forecast FY14 profit would increase by up to 45%, when compared to FY13. Based on last year’s dividend payout, our biggest investment bank can be expected to yield at least 3.2% with 50% franking.
Australian companies are renowned for their dividend yields but even after the market increases of 2013 many stocks are still forecast to boost their payments to shareholders. Of the three companies, Village Roadshow and Macquarie are likely to trend higher as a result of ongoing operations and an improving global economy whilst ANZ appears fully valued.
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Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.