When focusing on growth through capital gains, one of the most important things to remember is, no stock is a buy at any price.
However, for investors seeking dividend income, it's just as important.
It doesn't matter how well liked a company's products or services are. Likewise it doesn't matter if a company's forecast dividend yield is 5% or 50%, there comes a time when every stock moves out of the 'Buy' zone.
For Woodside Petroleum Limited (ASX: WPL), Westpac Banking Corp (ASX: WBC) and Telstra Corporation Ltd (ASX: TLS), I believe the buying opportunity has come and gone.
Woodside, our largest independent oil and gas producer, has recently had its plan to buyout major shareholder Shell, knocked back. The resources heavyweight also announced it'd be dropping out of the running for the giant Leviathan gas field off the coast of Israel. As a result, I feel Woodside's share price leaves much to be desired and despite a forecast dividend yield of around 6%, I think it's best left on the watchlist, for now.
Westpac too is struggling to impress investors and has seen its share price fall around 3% over the past three months. Whilst it currently trades on a yield of around 5.3%, the bank is tipped to grow cash earnings slowly over the next three years and shares currently change hands on a price-earnings to growth ratio of 3.3. Unless you bought Westpac at a price much lower than today's (shares opened at $33.65) then, I believe, your money could be better spent elsewhere (see below).
Lastly, Telstra continues to kick goals for shareholders with both modest growth potential and increasing cash flows. With the recent divestments of its Hong Kong mobiles business and part-sale of media business Sensis, the company is focusing on stronger growth lines such as network applications, an international expansion into Asia and mobiles. However with shares trading near their 12-year high, Telstra appears priced to hold, or sell, rather than buy.
A better dividend stock idea than Telstra – Free!
