Certain stocks could rise because of the deluge of superannuation money set to hit the market soon.
Financial services firm Credit Suisse named a number of stocks that it expects superannuation and self-managed super funds will be targeting for growth and long-term dividend income potential.
It said about $24 billion will be invested in Australian stocks over the next two years. More money chasing the same number of quality stocks means stocks like the ones below could see attractive share price gains.
Along with the regular dividend plays of the big four banks and Telstra Corporation Ltd (ASX: TLS), Credit Suisse analysts projected these four stocks could also see a stronger following.
Challenger Limited (ASX: CGF) is an investment management firm that offers annuities and other wealth creation products to supplement retirement income. They have been popular due to the desire to have extra income in addition to superannuation. Its dividend yield is 3.4% partially franked. I have highlighted the company a number of times previously because of its connection with long-term wealth creation.
Caltex Australia Limited (ASX: CTX) the oil refiner and petrol station operator is converting its refinery facilities in Sydney into an oil import terminal and is moving into a role more as a petrol distributor. This move could actually improve margins since refining isn't as profitable as it once was and it already has an extensive distribution network. The stock is up from about $22 to $28.80 since early July. It yields 1.3% fully franked.
iiNet Limited (ASX: IIN) has recently exceeded $1 billion in revenue for the first time when it reported a 19% increase in full year underlying earnings per share (EPS). The ISP and telecommunications company has about 20% of the total NBN market as subscribers. It plans to expand into the east coast regions as the NBN is rolled out across Australia. It is giving Telstra and other broadband and mobile providers some good competition and winning market share. Its yield is 2.8% fully franked.
M2 Group Ltd (ASX: MTU) is another internet service provider and telecommunications company that operates Dodo, iPrimus and Commander. It impressed the market with its 60% gain in full year underlying profit and investors are looking for more. It is establishing itself deeper with retail and business customers by bundling such things as utility payments with regular broadband and mobile services. That keeps customers connected and loyal longer for better overall company earnings. The way the company is evolving and growing shows it can adapt well in a competitive industry. The stock yields 3.2% fully franked.
Buying what the super funds and institutional fund managers are anointing as growth and dividend darlings could be a promising investment strategy. There is one more stock that wasn't mentioned, but has similar growth prospects.
It's not as widely followed, however The Motley Fool's analysts have called it The Top Stock Pick for 2014-15. The analyst team has written a free report which they're sharing with all interested investors.
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