If there's one thing I think is for certain, it's that dividend stocks will play a key role in driving the Australian share market higher in 2015.
It's becoming an increasingly popular opinion amongst Australian economists that the Reserve Bank will lower interest rates by as much as 50 basis points this year. That would see them fall as low as 2 per cent, reducing term deposit and bond returns even further.
In search of more worthwhile returns, investors will look for some of the nation's higher yielding stocks. While Charlie Aitken of Bell Potter Securities reckons it'll be Telstra Corporation Ltd (ASX: TLS) and the big four banks that will benefit, there are numerous other stocks which could deliver even greater returns. Here are five worth considering before interest rates take another tumble.
1. Woolworths Limited (ASX: WOW). The selloff of Australia's supermarket behemoth has been completely overdone giving long-term investors the perfect opportunity to buy. At $29.88, the stock is forecast to yield 4.9% in the 2015 financial year, fully franked. Grossed up, that's a 6.9% dividend.
2. BHP Billiton Limited (ASX: BHP). The miner's shares have fallen almost 33% since August last year and, although they're not presenting as a good buy yet, they're certainly becoming more tempting. While investors should hold off from buying until the volatility in the sector subsides (or until the shares hit an unbeatable price), it's expected to yield 5.5% this financial year, fully franked. Should the miner maintain its progressive dividend policy, that yield should only increase in the years to follow.
3. JB Hi-FI Limited (ASX: JBH). Not only could overall sales increase for the consumer electronics and white goods retailer if interest rates fall, but the shares could also see a boost should investors flock towards its 5.4% fully franked dividend. With strong growth prospects, JB Hi-Fi looks a stock to buy today.
4. RCG Corporation Limited (ASX: RCG). The company which owns the popular The Athlete's Foot shoe store chain boasts decent growth prospects and a smashing dividend, which has also somehow been overlooked by the market. At 73.5 cents per share, the stock is expected to yield roughly 6.4% fully franked in financial year 2015.
5. Scentre Group Ltd (ASX: SCG). The shopping centre operator, which was spun out of the global Westfield restructure last year, could also be a great bet for income investors. While consumer confidence is expected to slowly increase, Scentre Group's shares could continue ascending while they're also tipped to yield roughly 5.5%, unfranked.
