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3 blue-chip stocks for income-seeking investors

With Aussie interest rates being just 2.5% and having the potential to go lower, it’s a painful time for savers and income investors. However, shares in our banks could offer a solution via top notch dividend yields. Here are three banks that offer sweet yields, trade at reasonable valuations and are forecast to grow earnings.

Commonwealth Bank of Australia

With a fat, fully franked yield of 5.3%, Commonwealth Bank of Australia (ASX: CBA) certainly ticks the ‘income’ box when it comes to investing. However, better still is the fact that the bank’s dividends are well-covered and sustainable.

Indeed, dividends are presently covered 1.3 times by profit and, with earnings expected to increase at an annualised rate of 5.6% over the next two years, it means that a brisk pace of dividend growth should take place. With shares trading on a P/E ratio of 14.4, there could be upside in the share price too.

Westpac Banking Corp

Also having a fully franked yield is Westpac Banking Corp (ASX: WBC), with shares in the bank currently yielding an impressive 5.5%. Although dividends per share are set to remain relatively flat over the next couple of years, this still represents a yield above that available from deposits.

With earnings growth of 4.9% per annum forecast for the next couple of years, Westpac seems to be a relatively safe income play. As with Commonwealth Bank, a P/E ratio of 13.7 indicates upside versus the ASX, which has a P/E ratio of 15.6.

Australia and New Zealand Banking Group

With the highest earnings growth forecasts of the three banks featured here, Australia and New Zealand Banking Group (ASX: ANZ) has the potential to raise dividends per share at the fastest rate.

That’s not to say that the current fully franked yield of 5.4% is shabby, just that shares in the bank could be yielding as much as 5.9% in 2015. With a P/E ratio of 12.4, there could also be scope for price appreciation. Especially once the market realises that ANZ’s bottom line is due to rise at an annualised rate of 10.7% over the next two years.

There's also a fourth company that could help to raise your income. It's featured in a free and without obligation guide called The Motley Fool's #1 Dividend Pick For 2014-15.

The company in question offers more than just a great yield, though. It has top notch growth potential and trades at a super low valuation. As a result, it could raise your income and boost your capital gains, thereby making 2014 and beyond an even more prosperous period for your investments.

Click here to find out our top dividend pick - it's completely free and without any further obligation to do so.

Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.

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