4 stocks that can benefit directly from a rising ASX

U.S. stock markets are hitting new highs with the S&P 500 Index now almost 28% higher than its 2007 peak before the GFC. The Australian market has lagged since 2010, yet in the past year has been making new multi-year highs from improving corporate earnings. As the S&P/ASX All Ordinaries Index (ASX: XAO) (Index: ^AORD) is rising, here are four stocks that generally benefit from a stronger financial market.

—  ASX Ltd (ASX: ASX): This company operates the Australian Securities Exchange, the ASX stock exchange itself. The company’s share price roughly follows the general rise and fall of the exchange. The All Ordinaries Index is up 10.6% since February and may be starting its climb back to its 2007 highs. That would bolster the company’s near-term prospects. It offers a 4.8% fully franked dividend yield.

—  Computershare Limited (ASX: CPU): As a share registry and transfer agency for share transactions, the company is involved heavily in the day-to-day buying and selling of stocks. In FY 2014, it had an 8.1% net earnings gain and the share price is up about 21% since October 2013. As share transactions and corporate activities like capital raisings and IPOs increase, so do the company’s business activity and revenues. Its yield is 2.5% partially franked.

—   Iress Ltd (ASX: IRE): Is a service provider of financial planning and wealth management systems such as XPLAN, the company benefits when investors increase share trading as well as build up investments for retirement. Order management and compliance are also important for superannuation and SMSFs (self-managed super funds), so the company’s services are very much in demand.

In FY 2014, net profit rose greatly thanks to earlier acquisitions of UK financial planning businesses, where it is now a leading service provider for portfolio and wealth management platforms. It has a yield of 3.8% partially franked.

—   Macquarie Group Ltd (ASX: MQG): Australia’s premier investment bank has definitely benefited from the recovery of international financial markets. Its stock has more than doubled in the past two years, thanks to gains from its fund management business, mergers & acquisitions, capital raisings and a growing IPO market. It offers a 4.7% partially franked yield.

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Of  these four stocks, which all pay good dividends, I would prefer Macquarie Group because of its market leader status and exposure to overseas financial markets. If income stocks are what you are seeking for your wealth creation, there is one more stock that you should read about.

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Motley Fool contributor Darryl Daté-Shappard does not own shares in any company mentioned. The Motley Fool owns shares in Computershare.

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