It's simple mathematics.
Higher share prices mean lower dividend yields from our favourite ASX stocks. Examples include Commonwealth Bank of Australia (ASX: CBA) and Woolworths Limited (ASX: WOW), who have both recently risen to all-time highs. Their dividend yields are now less than 5%. It's not ideal.
Especially while interest rates are at all-time lows and it seems impossible to escape the clutch of a higher inflation rate, currently at 2.7%. However all your worries could disappear if you add these three excellent income ideas to your portfolio.
1. Insurance Australia Group Limited (ASX: IAG) is the name behind insurance companies such as SGIO, SGIC, NRMA, CGU and Swann Insurance. IAG is expanding into new geographical locations and product groups which will bring higher earnings per share – perfect for income investors seeking a much higher dividend yield (and share price) in years to come. What's more, it currently trades on only 11 times FY14 earnings and is forecast to pay a 6.1% fully franked dividend!
2. Coca-Cola Amatil Ltd (ASX: CCL) is a name investors know and trust. Well…that is, until recently when the company forecast lower earnings and was forced to ask the government for a handout. However, CCA's headwinds are temporary and any investors who have ever wanted to own this fantastic long-term income stock should buy it while it's cheap. Now could be your opportunity. Based on Morningstar's analysts' consensus, it will pay a 5.5% dividend with 75% franking.
3. Telstra Corporation Ltd (ASX: TLS) is one of the best blue-chip stocks on the market. It's dominant, growing, agile and known for its fantastic dividends. Its International and Network Application Services divisions are growing rapidly, providing a huge runway for further growth. If you're a long-term investor, today is the day you should consider adding this income legend to your portfolio!
These 3 stocks are the most well-known and lucrative dividend ideas in the S&P/ASX 200 (ASX: XJO) (^AXJO). However, our top analysts have found an even better idea!
