Insurance Australia Group Ltd
With a dividend yield of 5.9%, Insurance Australia Group Ltd (ASX: IAG) has clear income appeal at the present time. That's especially the case with interest rates being cut recently and Aussie investors craving a decent yield even more than they were a few weeks ago.
However, IAG could become an even more enticing income play, simply because it seems to be in a position where it can afford to pay a much higher dividend, and still invest a sufficient amount of capital back into the business.
For example, IAG is forecast to have a dividend payout ratio of 73% in the next financial year and there could be scope for expansion moving forward. That's especially the case if, as forecast, IAG's results improve in 2016, thereby allowing the company to increase its appeal and cause improved investor sentiment to push its share price higher. As such, now could be a good time to buy a slice of IAG.
National Australia Bank Ltd.
The first quarter update from National Australia Bank Ltd. (ASX: NAB) released last week was somewhat mixed, with the bank's CEO, Andrew Thorburn, saying that it would take time for years of underperformance to be turned around.
That's not a major surprise, since over the last 10 years, for example, NAB has seen its bottom line decline at an annualised rate of 0.6%, which is clearly very disappointing at a time when many of its peers have delivered improving performance – especially since the global financial crisis came to an end.
Still, NAB is expected to increase earnings by 17.1% per annum over the next two years and it trades on a price to earnings (P/E) ratio of just 15.9. This indicates that growth is on offer at a reasonable price and it could be worth buying at the present time.
Suncorp Group Ltd
With Suncorp Group Ltd (ASX: SUN) due to release results this week, its short term share price performance could be somewhat volatile. After all, if it exceeds/does not meet expectations then the market could react strongly in the coming days.
However, looking a little further ahead, Suncorp could prove to be an excellent investment. For example, it appears to offer a potent mix of growth and value since it has a P/E ratio of 17.7 and is expected to increase its bottom line at an annualised rate of 38.5% over the next two years. This means that Suncorp has a price to earnings growth (PEG) ratio of just 0.46, which makes it a stock that could deliver strong gains over the medium to long term.
Of course, finding the best stocks for the long term is a tough ask – especially when work and other commitments limit the amount of time you can spend trawling through the index for them.
