Just in! GDP figures are pointing to more rate cuts in 2015.
That means, term deposit holders will be lucky to get a 3% return on their money in 2015.
Of course, that's before tax and inflation are considered.
Currently, National Australia Bank Ltd. (ASX: NAB) is offering 4% on $100,000 term deposits taken over five years. That means, your money would grow into $121,665 after five long years – hardly a decent return.
But it's not all bad news.
For example, falling interest rates will likely increase the allure of big dividend stocks on the ASX and push up share prices. With many paying a dividend in excess of 5%, sometimes with franking credits and the chance of capital gains, it's easy to see why many Aussies are turning to the sharemarket for superior gains.
Three of the best S&P/ASX 200 (INDEX: ^AXJO) (ASX: XJO) dividend stocks are Sky Network Television Ltd (ASX: SKT), Telstra Corporation Ltd (ASX: TLS) and Australia and New Zealand Banking Group (ASX: ANZ).
However it's important to remember, no stock is a buy at any price. That is, simply buying a company's shares because it's expected to pay a decent dividend can open investors up to significant downside risks. Ones which could wipe out any benefit of a biannual dividend payment.
For example Telstra has all the characteristics of a great defensive investment but its share price is high. At $5.68, it trades on forecast dividend yield of 5.3% (7.5% grossed-up) and price-earnings ratio of 15.
Similarly, Australia and New Zealand Banking Group (ASX: ANZ) is not in the buy zone, at today's price of $31.93 per share. However, ANZ is growing rapidly in international markets (accounting for 24% of revenues in FY14), has a good funding mix and offers a dividend yield of 5.56% fully franked (7.94% grossed-up).
Sky Network Television is name not many Australian investors are familiar with. It's the owner of New Zealand's premier pay-tv provider, with an audience market share of 29.4% and household penetration of 48.7%. Although it doesn't offer investors any franking credits, its current yield of 4.7% is expected to grow in line with earnings.
Foolish takeaway
In 2015 and for the foreseeable future, dividends are expected to remain at the forefront of Aussie investors' minds, as interest rates fall and the housing market slows. So if you haven't already, start building a watchlist of your favourite stock ideas and, when the price is right, hit the buy button.
