2014 has been a very challenging year for savers and income investors. With interest rates being just 2.5%, generating a decent income return has been tough.
The bad news is that it may be just as difficult next year, with an ultra-loose monetary policy set to remain in place over the next twelve months.
The good news, though, is that there are a number of ASX stocks which could offer superb income potential next year. Indeed, here are three prime examples that could well be the best dividend stocks for 2015.
Commonwealth Bank of Australia
With a fully franked yield of 5.1%, Commonwealth Bank of Australia (ASX: CBA) could be a remedy to low interest rates. Indeed, the bank has a sound track record of dividend growth, with dividends per share having risen at an annualised rate of 8.2% over the last 10 years.
Furthermore, dividends are forecast to grow by 5.3% per annum over the next two years, which means that shares in CBA could be yielding as much as 5.5% in FY 2016. In addition, CBA's dividend appears to be highly sustainable, since it has adequate headroom when making payments due to a dividend coverage ratio of 1.3.
Moreover, with CBA and its banking peers set to benefit from a low interest rate environment in 2015, the next couple of years could prove to be a profitable period, both for the bank and for its investors.
Woolworths Limited
Although its first quarter sales disappointed, Woolworths Limited (ASX: WOW) remains a top dividend pick. Certainly, 2015 may see the emergence of more competition in the supermarket sector, especially with the potential rise of Aldi and Costco over the short to medium term, but Woolworths remains a relatively stable income play that could be a real asset moving forward.
That's because it has increased dividends at an annualised rate of 11.6% over the last 10 years and, while its Masters hardware division continues to post losses, overall Woolworths is forecast to deliver earnings growth of 3% in each of the next two years.
While this is less than many investors are hoping for, the appeal of Woolworths rests in its comfortable dividend coverage ratio of 1.4, its relatively consistent top and bottom lines, its defensive qualities (including a low beta of 0.66) and a fully franked yield of 4.5%. As a result, it could prove to be an in-demand income play in 2015.
AMP Limited
While dividends have declined at AMP Limited (ASX: AMP) in recent years, with them falling by 8% in the last year alone, the wealth management company is expected to raise them at an annualised rate of 11.3% over the next two years.
This means that AMP could be yielding as much as 5.1% in FY2015. This would be a hugely impressive yield and with the company's bottom line growth meaning that AMP's dividend coverage ratio is forecast to be 1.4 times next year, it seems as though further dividend rises could be on the cards.
Clearly, a higher ASX would be a fillip for AMP, but even if the wider market stalls (as it has done in 2014), its plans to rationalise the business and make it more efficient could mean that it surprises on the upside in 2015. AMP also trades on a PEG ratio of just 0.53, which means now could be a great time to buy a slice of the company for its superb income prospects.
