Given the low rates on offer from term deposits, high quality dividend stocks are going to be the number one game in town for some time yet…especially the fully franked variety.
However it's important to understand the risks of transitioning money from safe cash and saving accounts, into the share market.
Firstly investors must be prepared to exercise patience because rushing in and overpaying for a stock or having expectations too high will leave you vulnerable to capital loss during a market selloff.
It's also important not to confuse volatility with risk. All share prices are volatile and capital risk is ever present in the market. Remember to focus on the underlying business, not the three-letter stock code, and…
Only consider investing in the share market if you're doing it for the long-term (i.e. five years or more).
3 rock-solid dividend stocks for your watchlist
- Australia and New Zealand Banking Group (ASX: ANZ) is our third largest bank by market capitalisation. Unfortunately, like its peers, its shares don't come cheap. Whilst its 5.7% fully franked dividend is sustainable, I believe fair value lies slightly below $30 per share. Currently priced at $32.57, I'd like to see a price well below today's before hitting the buy button.
- Suncorp Group Ltd (ASX: SUN) is a leading regional bank and insurance heavyweight. In the fallout of the GFC, Suncorp was swamped with a portfolio of bad commercial property loans. However the owner of brands such as AAMI, Bingle, GIO and Apia now appears to have recovered and boasts a forecast dividend yield over 6%, fully franked no less.
- Bank of Queensland Limited (ASX: BOQ) is another bank offering up a strong dividend yield and the prospect of long-term earnings per share growth. The growing owner-managed retail bank prides itself on customer satisfaction and has been kicking goals for shareholders in recent years. However, like its two peers above, despite offering a 5.8% fully franked dividend waiting for a lower price is advisable.
