In the news, investors are hearing about crude oil prices going down to lows not seen for years and are paying much less regularly at the petrol stations. In addition, the shaky economy and weak Aussie may lead to even more interest rate cuts.
If fuel costs and mortgage repayments (regularly two of the biggest monthly expenses) come down, consumers should have more disposable income. That could revive retail sales, so investors might want to look at retailing stocks now to pick up stocks at lower prices and take advantage of higher yields.
Here are four stocks with high yields over 5% that I would have on my watchlist.
– JB Hi-Fi Limited (ASX: JBH) has a yield of 5.2% fully franked and is trading at 12 times earnings. The electronics retailer rallied in share price almost 10% since mid-December and could go higher if the next sales update shows the holiday shopping season had decent sales growth. Having new Microsoft Surface tablet PCs, Apple iPhones and iPads and a bigger inventory of ever-popular PlayStation and Xbox consoles in stores in time for Christmas may have boosted revenue.
– RCG Corporation Limited (ASX: RCG) is the operator of The Athlete's Foot stores in Australia and distributor of a number of major shoe brands like Merrell, CAT (Caterpillar) and Sperry Top-Sider. The stock offers a whopping 6.6% fully franked yield. Earnings are forecast to grow around 10% per year for the next several years. Dividends should rise similarly since the company pays out a big proportion of its earnings to shareholders.
– Automotive Holdings Group Ltd (ASX: AHE) stock pays a fat 5.7% yield fully franked. Vehicle sales of Australia's largest auto retailer could benefit from further interest rate cuts, which make vehicle financing more affordable. On top of that, if petrol can stay low due to falling world oil prices, that also makes owning a car more attractive to consumers. Analysts are looking for solid earnings growth over the next few years, so Automotive Holdings Group is an attractive stock now.
– FlexiGroup Limited (ASX: FXL) offers credit and payment methods to consumers in leading retail stores and merchant businesses. Flexirent and Rentsmart are two rental payment systems that customers can buy or rent appliances and household items through in stores like Harvey Norman Holdings Limited (ASX: HVN). FlexiGroup also provides vendor financing and credit card services. When retail sales pick up, the company could see increased business. The dividend yield is an enticing fully franked 5.7%.
