To be ultimately successful in the stock market, we're required to find growing companies with a tendency to pay out big dividends. Something which is easier said than done, believe me.
In recent years, Telstra Corporation Ltd (ASX: TLS) has proven to be the perfect example of a company which can grow earnings whilst paying out a juicy fully franked dividend yield. National Australia Bank Ltd. (ASX: NAB) has done the same.
However one of Australia's most iconic brands, Qantas Airways Limited (ASX: QAN), has done the opposite. It has fallen from around $6 per share in 2007 to just $1.24 today, stopped paying out a dividend and issued more shares. Ouch!
But can we expect more of the same?
Qantas Airways
The flying Kangaroo is facing headwinds which I believe are long-term in nature and unlikely to be resolved anytime soon. Sure, they may save millions of dollars with their restructure in coming years but the airline industry is intensely competitive, risky and overcrowded. Analysts are forecasting losses in both FY14 and FY15. I believe Qantas is best left for day traders and institutions.
Telstra Corporation
With a forecast 29 cent fully franked dividend, Telstra shares will be at the top of investors' buy list in the current low interest rate environment. I like Telstra's long-term growth prospects, both locally and abroad, but I believe its share price has caught up with its potential. I would wait for a lower entry point before committing to a purchase.
NAB
With the biggest dividend yield of the major banks, it makes one wonder why NAB's share price is down 2% this year. However, delving a little deeper, it's easy to see why. Although I believe cash profits could jump in 2014, NAB continues to be plagued by a large portfolio of bad UK commercial property loans. Whilst an improving UK economy could see provisions drop (thus boosting cash profit), I do not believe it warrants a 'Buy' rating.
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