Although the RBA held interest rates steady at 2.5% this week, it seems increasingly likely that their next move could be down, rather than up.
Indeed, an ultra-loose monetary policy seems set to remain in place during 2015 and, while this could be positive news for growth investors in terms of low rates helping to stimulate the economy, it’s bad news for income investors and savers.
With this in mind, here are three companies that offer high yields, and could help you to beat low interest rates in 2015.
While AMP Limited’s (ASX: AMP) track record is not particularly encouraging when it comes to dividend growth, shares in the wealth management company still yield a partially franked 4.3%, which is considerably better than the 2.5% interest rate.
Indeed, despite dividends per share falling at an annualised rate of 10.5% over the last five years, upbeat forecasts for AMP’s bottom line over the next couple of years mean that the company could be yielding as much as 5% in FY 2015.
If met, that would be hugely impressive. Furthermore, with AMP’s earnings set to cover dividends 1.4 times in 2015, it appears as though shareholder payouts are sustainable as well as highly appealing. As a result, AMP could prove to be a top income play in 2015.
Woodside Petroleum Limited
While oil stocks such as Woodside Petroleum Limited (ASX: WPL) have been hit hard in recent months following a collapse in the oil price, an upshot of it is that they now offer more attractive yields.
In Woodside Petroleum’s case, this means that its shares currently yield a whopping (and fully franked) 6.8%. Clearly, this yield has been boosted by a falling share price, with Woodside Petroleum being down 13% in the last month alone.
Looking ahead, Woodside Petroleum’s earnings may come under pressure due to the lower price of oil, but with regards to its dividend it remains relatively well covered at 1.3 times. This means that there is headroom for the company when making dividend payments and, with shares trading on a P/E ratio of just 10.6, they seem to offer great value as well as an enticing yield.
Macquarie Group Ltd
Despite falling by 4.5% in the last month, shares in Macquarie Group Ltd (ASX: MQG) are still up 5% during the course of 2014. This means that their year-to-date total return is around 10%, since Macquarie yields a partially franked 5.1%, which is impressive and could help income investors to beat low interest rates in 2015.
Furthermore, Macquarie is expected to raise its dividend by 4.2% next year after cutting it in the current year. This seems sensible and appears to put the financial services company on a more sustainable financial footing, since dividends are forecast to be covered 1.4 times by profit in FY 2016.
And, with shares in Macquarie currently trading on a PEG ratio of 1.45, they seem to offer growth at a reasonable price. This means that another year of encouraging capital growth, plus a great yield, could lie ahead for investors in the stock next year.
These 3 stocks could be the next big movers in 2020
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Motley Fool contributor Peter Stephens does not own shares in any of the companies mentioned.
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