With interest rates likely to fall during the course of 2015 to try and stimulate a sluggish economy, dividends could become even more appealing to Aussie investors.
That's not only because of declining term deposit rates, but also because falling interest rates could push inflation higher. As a result, it may become more challenging to generate real increases in your income moving forward.
However, help may be at hand via these three stocks, all of which offer attractive yields and are forecast to grow dividends at a brisk pace.
Australia and New Zealand Banking Group
With a fat, fully franked yield of 5.7%, Australia and New Zealand Banking Group (ASX: ANZ) offers considerable appeal as an income stock. In fact, it yields nearly twice the average deposit rate and, perhaps more importantly, is likely to increase it at a faster rate than inflation moving forward.
That's because ANZ is forecast to increase dividends per share at an annualised rate of 5.5% over the next two years, which gives investors that are seeking a real increase in their income considerable headroom while inflation is 2.3%.
And, while the investigation into alleged manipulation of the Bank Bill Swap Rate may lead to a fine, ANZ's profitability remains relatively robust, with earnings having increased by 9.8% per annum over the last five years. Furthermore, with a P/E ratio of 12.1, there could be upward rerating potential since the ASX and wider banking sector have P/E ratios of 15.2 and 14 respectively.
Amcor Limited
Amcor Limited's (ASX: AMC) recent acquisition of China's Zhongshan Tian Cai Packaging Company for $34 million is an example of its potential to expand into fast-growing markets. This could help to push profitability upwards not only due to increased relative demand, but also because a fall in interest rates may cause a weakening of the Aussie dollar, which could boost Amcor's profitability even further.
As a result, Amcor's dividend looks to be relatively safe, especially because it is currently covered 1.8 times by profit. And, although Amcor currently yields just 3.3% (unfranked), dividend per share growth of 5.7% per annum is forecast for the next two years. This should help to keep income growth for its investors ahead of inflation and could help to push Amcor's share price even higher following 2014's 28% gain.
Transurban Group
While resource stocks have dominated the headlines in recent months, many investors seem to be turning to more stable companies such as Transurban Group (ASX: TCL). Its share price rose by an incredible 27% last year, as defensive stocks saw a sharp uptick in investor sentiment.
Looking ahead, further gains in Transurban's share price could be on the cards. That's at least partly because of its attractive yield of 4.2%, but also because it is forecast to increase dividends per share by 10.8% per annum over the next two years.
This means that in the 2016 financial year, Transurban could be yielding as much as 4.9% and, with its profitability as a toll and tunnel operator being relatively stable, such increases in shareholder payouts are arguably more likely to be met than for other, more cyclical stocks. As a result, Transurban could deliver more capital gains to go alongside an appealing income that is growing more than four times faster than the current rate of inflation.
