With interest rates stuck at 2.5%, it’s important to include some dividend stocks in your portfolio because you risk losing purchasing power whilst inflation is as high as 2.7%. But don’t worry if you think your late to the party, you can still buy some big name dividend stocks which are forecast to payout 5% of their profits in FY14.
As you’ll see below, sometimes taking a contrarian approach to picking your dividend stocks helps you to secure a great bi-annual income stream. But sometimes the usual suspects can also present compelling investment cases. Either way, these next three stocks are likely to give you what you want.
For a contrarian pick, if you’re ever going to buy Coca-Cola Amatil Ltd (ASX: CCL) now is the time to do it. Yes, its troubled SPC Ardmona canned fruit business is under margin pressure while the dollar is so high, yes the Indonesian market has become expensive as their currency depreciated and yes, Schweppes is in a price war with the beverage heavyweight. However these are likely to be temporary and if you think Coca-Cola will still be around in 10 years’ time, now is the time to buy. Based on FY13 payouts, it yields 6.3% plus 75% franking.
Telstra Corporation Ltd (ASX: TLS) is a top dividend payer with its legendary 28 cent full year payout expected to jump to 29 cents in FY14 for the first time in eight years. What’s more, its annual return is set to increase in coming years as it continues to build a huge cash balance following a number of recent divestments. Currently it yields 5.6% with franking.
Ardent Leisure Group (ASX: AAD) is another dividend stock forecast to payout 5% in FY14. It’s the owner of Goodlife Health Clubs, AMF and Kingpin Bowling, SkyPoint Climb, WhiteWater World, Dreamworld and Main Event in the US. As confidence returns to global markets and Main Event continues to grow, earnings (and dividends!) can be expected to climb higher.
Ardent and Telstra are continuing to grow strongly overseas while Coca-Cola is a long-term turnaround story. Nevertheless each of these three companies are worthy of a closer look and, at least, a spot on your watchlist.