At a time when interest rates on term deposits are falling, there are a number of Australian companies offering up excellent dividend yields which can easily exceed 5% per annum, grossed-up.
If you’re a passive investor it’s vital to maintain a healthy cash balance outside of the share market and diversify your wealth across a number of different assets. However there are many reasons why your long-term investment portfolio should hold a considerable amount of shares.
With that in mind, here are three Australian companies you should consider adding to your watchlist…
1. Australia and New Zealand Banking Group (ASX: ANZ) is due to report its full-year results this week with analysts tipping a cash profit result close to $7.12 billion. ANZ is the only big bank pushing aggressively into Asian markets and although some investors have criticised this move, it appears the bank’s ‘Super Regional Strategy’ is beginning to gain traction. In the coming year, ANZ is expected to pay a fully franked dividend equivalent to 5.3%, or 7.6% grossed-up.
2. Bank of Queensland Limited (ASX: BOQ) is another bank offering healthy growth prospects and a superior dividend yield, forecast to be 5.8% fully franked. BOQ is expanding its unique owner-managed branch (OMB) network around the country and has set a number of strategic initiatives over the next two years. With healthy balance sheets, it presents a viable alternative to owning the other ‘big four’ banks such as Commbank, Westpac and NAB.
3. Ardent Leisure Group (ASX: AAD) is the owner of entertainment and leisure assets throughout Australia and the USA. Its stable of brands includes Goodlife Health Clubs, Kingpin Bowling, Dreamworld and more. Although the group’s unfranked dividend yield of 4% may seem lacklustre, it makes up for it with superior growth potential. For example, the group today reported a strong first quarter with revenue up 10% and EBITDA up 5%. In the USA, Ardent’s Main Event entertainment centres are experiencing rapid growth, recording a 39% increase on prior year revenues.
Buy, Hold, or Sell?
At today’s prices, I believe ANZ and BOQ are slightly expensive and are probably not great investments, despite the likelihood of higher earnings in the near term. I would wait for a lower entry point. However, Ardent Leisure continues to kick goals for shareholders and in the long term looks to be a winning investment.
5 stocks under $5
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*Extreme Opportunities returns as of June 5th 2020
Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any of the mentioned companies.
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