With speculation that interest rates in Australia could still have further to fall, self-funded retirees who are reliant on interest from their term-deposits for income are in a difficult position.
The low interest rate environment is one reason why self-managed super funds (SMSF) are utilising high-yielding equities to provide them with a reliable stream of income.
It’s no secret that blue-chip telco Telstra Corporation Ltd (ASX: TLS) has been a huge beneficiary of investors’ chase for yield. It had a steady 28 cents dividend, which is soon likely to be 29 cents per year. Telstra’s share price has also enjoyed a good run in the past year, it’s neck-and neck with the S&P/ASX 200 Index (Index: ^AXJO) (ASX: XJO) in sporting a gain of 11%.
While the share price rally has seen the forecast FY 2015 yield fall to 5.3% fully franked, that’s still a lot better return than keeping your money in the bank.
An even bigger yielding opportunity
Macquarie Radio Network Limited (ASX: MRN) owns and operates the popular 2GB Radio station. While the dividend hasn’t been nearly as steady as Telstra’s, in FY 2013 it paid a record ten cents per share. That payout looks set to be repeated in FY 2014 with Macquarie Radio already paying a five cent interim dividend and with management providing guidance that full year underlying earnings should grow by 5%, a final five cent dividend would seem likely too.
With the stock trading at $1.12, this implies the stock could yield 8.9% fully franked.