It seems the banks are finally beginning to see what the Reserve Bank of Australia (RBA) has been saying for some time.
The domestic economy is spluttering along and interest rates are set to stay low for the foreseeable future.
Indeed, short-term rates on term deposits and savings accounts are lower than 3%.
So if you’re thinking of adding some big dividend stocks to your investment portfolio, it appears now would be a great time to start. Here are three popular big dividend stocks for your watchlist.
1. National Australia Bank Ltd (ASX: NAB) is Australia’s fourth largest bank by market capitalisation, but largest by total assets. In recent years NAB’s profit growth has trailed behind its closest peers, which has resulted in its shares trading on the lowest price to book ratio (1.56). Looking forward NAB shares trade on a forecast P/E ratio of 12 and dividend yield of 6.3% fully franked.
2. Telstra Corporation Ltd (ASX: TLS) is renowned for its large and sustainable dividend payments. This can be put down to its huge cash flows and strong profit margins. In the coming year, Telstra is expected to pay a dividend of 30 cents per share fully franked, placing it on a yield of 5.2%.
3. Macquarie Group Ltd (ASX: MQG) is Australia’s premier investment bank and a diversified financial powerhouse. Macquarie derives a significant portion (65%) of total income from international markets. With its capital markets facing businesses expected to perform well in the near term, Macquarie is bolstering its medium term outlook with its annuity style businesses. Macquarie currently trades on a forecast dividend yield of 4.97% with partial franking.
Buy, Hold or Sell?
Despite offering big dividend yields, I believe both NAB and Telstra are not great investments at today’s prices. Macquarie, on the other hand, appears to be a trading in a price range which isn’t too demanding, given its growth outlook for the medium to long term.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*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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