3 high-yield stocks to beat low interest rates

Even though it feels like interest rates can’t possibly go any lower, the RBA could move them lower over the medium term.

Indeed, even though savings account rates are barely ahead of inflation, things could get much worse for savers and income investors, as the RBA may be willing to cut rates in order to put the Aussie economy on a firmer growth footing.

For example, slow wage growth and higher than desired unemployment could provide them with the excuse to further reduce rates.

Of course, one way of overcoming such low rates on cash savings is to buy shares in high quality, high yield companies. With this is mind, here are three prime examples that could boost your income in 2015 and beyond.

Woolworths Limited

One sector that is set to benefit from a lower interest rate is retail. Despite this, recent sales numbers from Woolworths Limited (ASX: WOW) disappointed the market and, as such, shares in the retailer have fallen by 5.2% in November.

However, better performance could be around the corner, since Woolworths is expected to increase its bottom line at an annualised rate of 3% over the next two years, which should allow it to raise dividends at a similar rate.

This means that in FY 2016, Woolworths could be yielding a fully franked 4.3% and, with the potential for positive surprises resulting from an even lower interest rate, the company could be worth buying at the present time.

Suncorp Group Ltd

With a restructuring programme set to slash its cost base over the next couple of years, Suncorp Group Ltd (ASX: SUN) could prove to be a sound buy. Indeed, its bottom line is due to be 91% higher in FY 2016 than it was in FY 2014, which means that the insurer and banking play could be trading on a P/E ratio of just 13.5 in a couple of years’ time (assuming no change in its current share price).

However, it’s with regard to dividends where Suncorp really appeals. That’s because it currently yields a fat, fully franked yield of 5.7% and has a strong track record of dividend growth, too. For example, over the last five years, dividends per share have grown at an annualised rate of 21.3%, which means that Suncorp could prove to be a sound buy for income seekers.

AMP Limited

While AMP Limited’s (ASX: AMP) yield of 4.2% is only partially franked, the insurance major is set to increase dividends per share at an annualised rate of 11.3% over the next two years. This means that AMP could be yielding as much as 4.9% in FY 2015, which is well ahead of the ASX’s current yield of 4.2%.

Furthermore, with financial products seeing increased demand in emerging markets such as China, AMP is well placed to tap into increasingly strong growth for its offering. AMP’s purchase of a 19.9% stake in China Life Pension Company could prove to be highly rewarding for investors in the stock.

Clearly, AMP, Woolworths and Suncorp offer excellent income potential and could prove to be excellent dividend stocks over the medium to long term.

However, there is another ASX stock that I think could prove to be an even better income play than AMP, Woolworths or Suncorp. In fact, it's been named as The Motley Fool's Top Income Stock.

The company in question offers a superb yield and excellent dividend growth prospects. As a result, it could boost your income and make 2015 and beyond an even more prosperous period for your investments.

Click here to find out all about it - 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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