With cash rates stuck at 2.5% and a consensus that they’re unlikely to rise for a long time yet, any smart investor knows owning shares in highly profitable companies will be more valuable than owning paper money in the year ahead. Here are some solid blue-chip businesses to pay you an income based on defensive earning streams and competitive advantages.
Australia’s largest toll road operator and owner, Transurban Group (ASX: TCL), has 100% ownership of CityLink in Melbourne and Sydney’s Lane Cove tunnel and Hills M2 motorway. Other interests include the Eastern Distributor, Westlink M7, M5 Southwest and Cross City tunnel in Sydney.
The group posted some decent results for the half-year ending December 2013, with proportional EBITA of $463 million, up 11.1% on the prior corresponding period. It also increased its FY 2014 forecast distribution to 35 cents per share, placing it on a partly franked yield of 4.5%, with dividends forecast to steadily rise out to 2016.
Sydney Airport Holdings Ltd (ASX: SYD) is another business with rock solid credentials and an attractive income stream. Selling for $4.33 it trades on a 5.43% yield based on forecasts for a 23.5 cents per share payout in FY 2014. As an irreplaceable piece of infrastructure, investors in this business can rest assured it’s not going anywhere soon.
Stockland Corporation Ltd (ASX: SGP) remains one of the ASX’s best property plays. It’s a colossus unlikely to be knocked out of its stride by anything other than the greatest of global financial shocks and based on forecasts for an FY 2014 24 cents per share payout, it trades on a handy 6.18% yield.
Explosives and mining support business Orica Limited (ASX: ORI) is an option for those prepared to take more risk in the pursuit of potentially better returns. The industrialisation of emerging economies is a long-term tailwind and selling for $19.48 Orica trades on 12 times forecast earnings with a 4.93% yield based on projected payouts.