As 2014 progresses towards its conclusion, many investors will reflect on the year as one of slight disappointment.
After all, the ASX has made capital gains of just 3% year-to-date.
However, the great thing about the ASX is that it continues to offer top notch yields that can really make a huge difference to your income next year.
And, with the RBA seemingly happy to keep rates at just 2.5% for the foreseeable future, attractive yields from high quality stocks could prove to be very lucrative over the next year or so.
With that in mind, here are three companies that offer great yield potential and which could have bright futures.
Westpac Banking Corp
With a yield of 5.4%, Westpac Banking Corp (ASX: WBC) offers supreme income potential. Indeed, over the next couple of years, Westpac is expected to increase dividends per share at an annualised rate of 4.6%. This is roughly twice the current rate of inflation, which means that investors should be able to look forward to real terms increases in their income from the stock. And with a strong track record of dividend growth (they have increased by 6.9% per annum over the last ten years), longer term holders of the stock should benefit from a strong growth rate in dividends, too.
Fortescue Metals Group
While Fortescue Metals Group Limited’s (ASX: FMG) dividend track record is not as impressive as that of Westpac, it could still prove to be a superb income play in 2015. That’s because, despite a cut in dividends per share in the current year of 51%, it still yields a very enticing 3.3%.
Of course, a declining iron ore price has been the major cause of the dividend cut, with Fortescue rightly deciding to prioritise reinvestment over shareholder payouts. However, dividends remain well covered at over three times and, looking ahead, are expected to rise by 16.5% next year. This means that Fortescue could be yielding as much as 3.8% in FY 2016, with further dividend increases on the cards if recent impressive production numbers continue.
It’s been a positive week for Scentre Group Ltd (ASX: SCG), with the company announcing strong third quarter results that showed five consecutive quarters of retail sales increases. Furthermore, the company raised an additional $700 million and agreed to reduce its financial leverage via the sale of its stake in five New Zealand shopping malls.
In terms of its income attraction, Scentre continues to offer investors a super (although unfranked) yield of 5.7%, with retail sales being upbeat and the RBA seemingly willing to keep rates low over the medium term, Scentre could prove to be a very profitable income play in 2015 and beyond. Especially with dividends per share set to rise at an annualised rate of 3% over the next two years.
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Returns As of 6th October 2020
Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.
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