While the first few weeks of volatile trading this calendar year will have no-doubt unsettled more than a few investors, there is always a silver lining that comes from volatility and lower prices…
Investment opportunities expand
That’s right, rather than being dismayed, long-term investors welcome the opportunity which lower prices bring. For long-term investors looking to add some high yielding dividend stocks to their portfolio, recent price falls have increased the appeal of a number of blue-chip stocks.
Here are five stocks which according to a report in the Australian Financial Review (as of last Friday) are now trading on forecast yields over 6.5% when grossed-up for franking credits.
- Telstra Corporation Ltd (ASX: TLS): gross yield 6.8%, net yield 4.7%
- Santos Ltd (ASX: STO): gross yield 6.8%, net yield 4.8%
- Commonwealth Bank of Australia (ASX: CBA): gross yield 6.8%, net yield 4.8%
- BHP Billiton Limited (ASX: BHP): gross yield 6.9%, net yield 4.8%
- ASX Ltd (ASX: ASX): gross yield 6.9%, net yield 4.9%
Make sure the dividend is maintainable
Perhaps the single most important factor income-seeking investors need to focus on is the sustainability of a yield they purchase. For example, while Fortescue Metals Group Limited (ASX: FMG) has an expected grossed-up yield of 12.2% which of course sounds appealing, it would seem reasonable to question whether Fortescue’s dividend is at risk of a cut? In contrast, investors can hold a very high level conviction in Telstra’s ability to meet market expectations for a 30 cent dividend.
Where to invest $1,000 right now
When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*
Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now.
*Returns as of June 30th
Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned.
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