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.
