Owning solid, dividend-paying stocks is an essential requirement for many investors. The situation has become particularly critical for many self-funded retirees who rely on income and are faced with official interest rates at a lowly 2.5%.
The last few years have seen investors pile in to blue-chip stocks such as Telstra Corporation Ltd (ASX: TLS), Commonwealth Bank of Australia (ASX: CBA) and Woolworths Limited (ASX: WOW). While these stocks still offer attractive forecast fully franked yields of 5.3%, 5.1% and 4.1%, many investors are becoming concerned that their valuations are stretched.
On the one hand, given the bull market temperament it isn’t surprising how little is said about defensive investments such as property stocks and Real Estate Investment Trusts (REITs). On the other hand, a lofty market is perhaps exactly the time that more should be said about defensive assets!
Investors are regularly reminded to have a diversified portfolio. Arguably the best way to diversify is not simply to own a dozen different stocks but to own a dozen different, uncorrelated stocks which offer exposure to different asset classes such as infrastructure, agriculture, commodities, industrials and property.
When it comes to property stocks there would appear to be some high quality, defensive opportunities which investors are missing. Here are three to consider:
Lend Lease Group (ASX: LLC) is a well-respected global property and infrastructure company. According to Morningstar data it is forecast to earn 106.2 cents per share in FY 2015. This implies the stock is trading on an attractive price-to-earnings ratio of just 12.4 and an unfranked yield of 3.9%.
National Storage REIT (ASX: NSR) is a recently listed provider of self-storage facilities. The prospectus stated that the group expected to pay an annualised distribution of 7.8 cents per share. With the stock trading around 40% above its IPO price, this yield is still appealing at 5.6% unfranked.
Stockland Corporation Ltd (ASX: SGP) owns some of the most sought after property in Australia. It is forecast to continue to pay a steady dividend of 24 cps which equates to an unfranked yield of 5.5%.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of February 15th 2021
Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned in this article.
- 3 ASX stocks to buy now to get rich later – October 20, 2016 1:34pm
- Why this fund manager is worried about the sustainability of bank dividends – October 18, 2016 7:56am
- Here’s why I might buy these 2 beaten-up share bargains – October 17, 2016 4:18pm