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3 stocks with fat yields: Commonwealth Bank of Australia, AMP Limited and Santos Ltd

Commonwealth Bank of Australia

With a dividend yield of 4.5%, it’s clear to see why Commonwealth Bank of Australia (ASX: CBA) appeals to many investors that are searching for a decent income.

Furthermore, the RBA’s recent cash rate cut has been passed on by CBA to its customers and, looking ahead, this could increase demand for new loans and also reduce the volume of bad loans, too. As a result, CBA could find its bottom line figure surprising on the upside and rising by more than the 6.2% per annum over the next two years that is currently being priced in by the market.

As a result, now could prove to be a good time to buy a slice of CBA, with its offer of upside potential and a great yield.

AMP Limited

Although AMP Limited (ASX: AMP) does not have a great track record when it comes to dividend growth, it remains a highly appealing income play at the present time. For example, it has reduced dividends per share at an annualised rate of 10.5% over the last five years and, despite this, it still yields a partially franked 4.1%.

Looking ahead, AMP is forecast to increase dividends per share by 11.4% per annum over the next two years. This means that it could be yielding as much as 4.8% by the end of the current financial year, which could help to improve investor sentiment in the company and push its share price higher.

So, while its shares are up 39% in the last year alone, there could be more capital gains (as well as income) on offer through buying a slice of AMP.

Santos Ltd

With the oil price having fallen heavily over the last year, it’s perhaps of little surprise that Santos Ltd (ASX: STO) is expected to make significant redundancies in the near term. After all, its top and bottom lines have come under considerable pressure in recent months, so cost cutting could become a feature of its short to medium term future.

However, with its share price having fallen by 37% in the last year, Santos now yields a rather appealing (and fully franked) 4.3%. As a result, it is now a realistic income play, although investors in the company must accept a relatively high degree of volatility – especially in the short run.

But, with Santos trading on a price to book (P/B) ratio of just 0.8, it seems to be attractively priced at its current level and, as a result, offers investors the potential for capital gains as well as an appealing income during the remainder of 2015.

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 Peter Stephens does not own shares in any of the companies mentioned.

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