The biggest problem when the market climbed higher was that most ASX stocks became too expensive. That was particularly the case with the nation’s high-yielding dividend stocks, which investors from all corners of the earth swooped on as a way to beat the low interest rate environment.
However, the market’s sharp downturn over the last month or so has seen a number of these stocks fall back to far more appealing prices. With some analysts suggesting the sell-off has been ‘overdone’, now could be an excellent time to capitalise on these opportunities to potentially make some huge profits in the coming years.
It should be noted that I’m not even talking about the big four banks, Telstra Corporation Ltd (ASX: TLS) or the supermarket duopoly. Instead, I’m talking about stocks that not only offer fantastic dividend yields, but ones that also have the capacity to deliver capital gains too.
One of the more appealing opportunities right now seems to be specialty discount retailer JB Hi-Fi Limited (ASX: JBH), which is currently sitting at its lowest price since June 2013. Despite strong headwinds facing the sector, JB Hi-Fi has still managed to grow revenues and earnings consistently year over year while it should continue to benefit from the rollout of its new ‘HOME’ format stores. At $15.06, it offers a tantalising 8% dividend yield, when grossed up for franking credits.
Insurance Australia Group Ltd (ASX: IAG) has also fallen in price over the last month and is offering investors an even better opportunity to stock up. Despite the company’s ability to grow revenues and earnings strongly over the coming years – thanks in large part to its acquisition of Wesfarmers Ltd’s (ASX: WES) insurance underwriting business – it is still trading on a forecast P/E ratio of just 12.3. While I believe that is quite underdone considering its future prospects, its incredible 9% grossed-up dividend is simply the icing on the cake.
Although Carsales.Com Ltd (ASX: CRZ) is normally considered to be a growth stock, it also offers a generous dividend yield to shareholders. The stock has fallen heavily over the last six weeks and is now trading at just $9.68 – a full 23% below its 52-week high. As it stands, Carsales.Com offers a grossed up 4.7% dividend yield but that is expected to grow substantially over the coming years as the company continues to expand its dominance in the market.
Don’t miss out on the ASX’s BEST dividend stock
Despite the market’s recent sell-off, the fact remains that Australian investors will continue to love their high-yielding dividend stocks well into the future.
Not only are they a great way to compound your wealth over the ultra-long term, they can also provide a steady, reliable source of income for young people, families or retirees alike.
If that’s what you’re looking for, then I urge you to consider this ultra-promising ASX stock which offers a fat, fully franked dividend in addition to excellent growth potential. That’s right, you could not only profit from regular dividends but also from fantastic capital gains over the years – an unbeatable combination.
Although this stock still appears to be cheap, I doubt it will be for long. That’s because once the ‘experts’ realise its true potential, the stock could jump strongly, perhaps never looking back down.
So I urge you to take a look at our FREE investing report right now, before it’s too late. To access your copy, simply click the link below, enter your email and unlock this promising stock before you miss the boat.
Motley Fool contributor Ryan Newman does not own shares in any of the companies mentioned.