Investors have long been attracted to Commonwealth Bank of Australia (ASX: CBA) shares due to their 'safety', their solid fully franked dividend yield and their rampaging gains. However, with the stock now trading at an all-time high price and offering a yield of just 4.6% investors would be far better off considering other alternatives.
Here are three stocks you should strongly consider buying before Commonwealth Bank of Australia…
- Insurance Australia Group Limited (ASX: IAG): Not only is Insurance Australia Group one of Australia's top insurance companies, it also offers an incredible fully franked 6% dividend yield. That's a better yield than is offered by any of the big four banks and blows the pants off the returns on any term deposit! The stock is reasonably priced, trading on a P/E ratio of 11.4, and should be strongly considered by all investors.
- Telstra Corporation Ltd (ASX: TLS): Given the stock's strong run over recent years, many investors have put it in the same category as Commonwealth Bank – overpriced and with little upside potential. That's where they're wrong. The company's dominance in the Australian telecommunications industry is unquestionable while it is also targeting rapid growth in Asian markets which could reap shareholders fantastic gains over the long-term. Priced at $5.36 a share, the stock offers an enviable fully franked 5.3% dividend yield.
- M2 Group Ltd (ASX: MTU): Although its fully franked 3.8% yield may not be quite as high as Commonwealth Bank's, its growth prospects more than compensate. M2 Group offers enormous value to investors and the capital gains that could be recognised in the coming years should strongly outweigh any dividends distributed. While the company has thus far focused on growing through acquisitions of companies like Dodo and Primus, it will now turn its attention towards improving its debt situation and growing organically.
Another 'tasty' dividend stock ready to run wild…
The unfortunate thing about Insurance Australia Group, Telstra and M2 Group is that their shares have all soared in recent months. However, The Motley Fool's top analysts have uncovered another huge dividend stock which the market doesn't seem to have yet discovered…
