With interest rates still being just 2.5%, it’s proving to be a challenging time for savers. Indeed, with the ASX pulling back in recent weeks, dividends could become an even more important consideration for investors. That’s because, with the potential for capital gains being highly uncertain over the short term, investors may be willing to pay a premium for a high income return. As such, high-yielding stocks could outperform the wider index as investors bid up their prices. With that in mind, here are three that could boost your portfolio’s income.
Seven West Media Ltd
It’s been a disappointing year for investors in Seven West Media Ltd (ASX: SWM), with shares in the company falling by 17% year-to-date. However, they could have a much brighter future, since they now offer great value and income prospects. For example, Seven West currently yields a fat, fully franked 6.1%, which is much higher than the ASX’s yield of 4.6%. In addition, shares in the company trade on a P/E of just 9.3, which is a whopping 42% lower than the ASX’s P/E of 16.1. Indeed, a low valuation and high yield could prove to be a potent combination moving forward.
It’s been a similar story for investors in UGL Limited (ASX: UGL) in 2014 as it has been for those in Seven West, with shares in the outsourcing company falling by 8% since the turn of the year. However, with shares in the company now trading on a P/E of just 10.1 (versus 16.1 for the wider market), they could prove to be a good buy right now. In addition, they offer a 50% franked yield of 6%, while EPS is forecast to increase at a pace that is roughly in-line with the wider market at 3% for the current year to June 2015. As a result, UGL could make for an attractive value and income play.
Downer EDI Limited
It’s been a better 2014 for investors in Downer EDI Limited (ASX: DOW) than for those in Seven West and UGL, with the engineering, construction and asset management provider delivering flat share price performance in the year thus far. However, things could be on the up, since Downer continues to offer great value for money at current price levels, with the stock having a price to book ratio of just 1.2 and a P/E of only 10.5. Better still, investors can take advantage of a fully franked yield of 4.8% which, when combined with its attractive valuation, means that Downer could garner increased interest from investors. Indeed, Downer, alongside UGL and Seven West, could prove to be a great income and value play.