Over the past couple of months the Australian economic outlook has fallen. Many commentators are forecasting rate cuts in 2015 resulting in the already meagre returns from term deposits taking a turn for the worse.
It is at a time like this that investors should look to seek out high yielding dividend stocks to improve their returns. Here are three such stocks to boost your income.
Flight Centre Travel Group Ltd (ASX: FLT) has had it rough lately, with the weak economy forcing them to issue a profit downgrade. Whilst its Australian operation is truly the engine room, over the past four years it has endeavoured to reduce reliance on Australia.
This theme is set to continue with the company targeting growth in the corporate travel segment in the UK and US. It's also looking to grow its share of European sales in the US leisure market, a $40 billion market that is larger than the Australian outbound market. With recovery of the US economy underway this strategy is likely to be very lucrative.
The travel agent industry has been repeatedly under-fire over the past decade (think e-commerce, GFC and SARS), yet it has managed to bounce back every time. Flight Centre is a clear example of this, and a dividend yield of 4.68% makes it even more attractive.
Fast food chain operator Collins Foods Ltd (ASX: CKF) is looking to expand its footprint and refresh current store formats, with about $25 million earmarked for store refurbishments over the next four years in Western Australia and Northern Territories alone.
The company operates the KFC brand in Australia which is well supported, underpinned by strong new product promotions and innovative family dinner offerings. This is evident through its strong first-quarter FY15 performance of 21% prior corresponding period growth in NPAT.
The stock is a good pick within the fast food sector with a good dividend yield of 4.85% backed up by strong cash flow generation.
The insurance industry has recovered strongly since the GFC and Insurance Australia Group Ltd (ASX: IAG) is a great example – it has managed to grow dividends at 31% CAGR since 2009. Although its dividend is unlikely to continue growing at this rate, the company has taken steps to ensure it keeps rising.
The company restructured its Australian operations so that it is product aligned rather than brand aligned. This move is expected to generate annualised cost savings of $230m by the end of FY2016. The acquisition of the former Wesfarmers insurance portfolio will also add to growth in the future. Not only is this expected to strengthen the company's market leading positions in its key markets of Australian and New Zealand, it is also likely to reduce their loss ratio by enhancing the benefits of risk pooling.
The future looks bright for the company, and now might be a good time to capitalise on its generous 6.21% dividend yield.
