Whilst the RBA might lower interest rates in 2015 many companies on the local sharemarket within the S&P/ASX200 (ASX: XJO) (INDEX: ^AXJO), are expected to pay dividends in excess of 5%.
Despite the risk of a sharemarket crash ever-present, long-term shareholders can receive dividends and have the added benefit of capital gains in well-priced companies.
Westpac Banking Corp (ASX: WBC), Coca-Cola Amatil Ltd (ASX: CCL) and Ardent Leisure Group (ASX: AAD) are three quality companies expected to yield hefty dividends in 2015.
Westpac, Australia's second-largest lender by market capitalization, has leading market shares in household mortgages and deposits and business banking. Since almost going bust in the early 1990's, its exposure to the booming property market has bode well for it over the long term, with both earnings and dividends per share growing strongly. It is expected to yield a dividend equivalent to 5.8% in 2015. However, its current valuation leaves much to be desired. As a result, it's probably best left on your watchlist, for now.
Coca-Cola Amatil or CCA, is Australia's bottler and distributor of Coca-Cola products and Beam branded alcoholic beverages. After a tough 2013 and 2014, where CCA shares were sold down over 40%; CEO Alison Watkins appears to be steering the ship in a positive direction. It's expected to yield 4.4% with partial franking (5.8% grossed-up) in the coming year. Whilst now clearly appears to be a sound buying opportunity, for long-term investors (five years or more), the debate surrounding a decision to invest in CCA is likely based on whether, or not, you believe the market for fizzy drinks is in structural decline given the prominence of 'healthier' alternatives.
Finally, Ardent Leisure is the owner of Dreamworld and White Water World theme parks, AMF and King Pin Bowling, Goodlife Health Club and, in the USA, Main Event – an all in one entertainment business. In the coming year, Main Event will be a significant contributor to group revenues and make the 15% selloff in the company's share price over the past six months appear to be a great buying opportunity. So too does its forecast 5.4% dividend.
The major concern I have with an investment in Ardent is its accounting practices. Indeed any company which reports EBITDA (earnings before interest tax and depreciation) should be carefully scrutinised. There're many reasons why investors should be cautious of those who report EBITDA. But the world's greatest investor Warren Buffett summed up EBITDA, which some pronounce EBITDAAAH, best, when he said, "Does management think the tooth fairy pays for capital expenditures?"
