What does Australia need to kick start the economy and get our growth back on track?
According to reports in the Fairfax press financial services firm Credit Suisse thinks lowering interest rates would be a good step. This follows the opinion of others such as Deutsche Bank and Goldman Sachs that economic drivers like industrial expansion and employment figures are too low.
Oppositely, the Aussie dollar is seen as too high to give much stimulus. So one of the last economic levers that the RBA has is interest rates. It can push out in time the need to raise rates to give the economy some breathing room. However, sluggish growth may now require lower interest rates to gain some traction, according to Credit Suisse.
That's great for homeowners with mortgage repayments, but for fixed income investment customers, it may mean another hit to their passive income.
High-yield dividend stocks will become even more in demand as superannuation fund holders look for ways to maintain portfolio income.
With that in mind, Foolish investors may be interested in the two high-yield stocks below to firm up their own dividend income.
— Insurance Australia Group Ltd (ASX: IAG) is paying a huge 6.0% fully franked yield which is higher than almost all of the big four banks. The general insurer is well known for such brands as NRMA Insurance, SGIO and CGU.
It has just expanded its business by acquiring the insurance underwriting business of Wesfarmers Ltd (ASX: WES), so over the coming year the revenue growth from that should appear. That will hopefully translate into a higher annual dividend as well. As a well-established market leader, it could be a good long-term stock for retirement income.
— Super Retail Group Ltd (ASX: SUL), the specialty retailer with brands like Supercheap Auto, BCF, Rebel Sports and Amart sports, could benefit from lower interest rates because customers potentially would have more disposable income left over from lower mortgage repayments.
Also, a relatively high Aussie dollar gives the company stronger purchasing power for imported goods. Lower costs and potentially higher sales revenue may mean bigger earnings for the retailer. Right now, the stock yields a nice 5.1% fully franked. If fixed income interest goes lower, that yield will look very attractive.
