Recently, investors are more keenly hunting for high-yield stocks. The chance of even lower interest rates is fueling the desire to maintain returns in a slow-growth economy. The S&P/ASX 200 Index (ASX: XJO) (Index: ^AXJO) may be up slightly in the past several months, yet the Australian economy is not expanding as it once was with the booming mining industry.
That will take some time to work out, so private and professional investors value quality yield stocks even more now. I previously wrote about some institutional investors moving into mining and energy stocks, but cyclical resources stocks have extra risks from commodities markets, so they wouldn't be my first choice for yield.
Here are three stocks that are offering solid yields over 5%, more than double the RBA's 2.25% cash rate.
National Australia Bank Ltd (ASX: NAB) has the highest yield of the big four banks at 5.3% fully franked. It is steadily dealing with its under-performing UK business, which will benefit its bottom line over the next several years. It's still known as Australia's business bank and that distinction makes its service brand stand out.
Harvey Norman Holdings Limited (ASX: HVN) surprised the market with half-year net profit up 27.4%. Increased retail sales and company property valuations drove the earnings gain. Although the stock is up over 30% since the start of 2015, it still yields 5.2% fully franked. Among the major retailers, it has pulled ahead the most recently. Analysts are forecasting double-digit earnings growth on average in the next few years. Now could be a good time to pick up some stock while retail trade is still recovering.
G8 Education Ltd (ASX: GEM), the childcare centre operator, is moving towards its goal to become the largest operator in its industry. Its pace of acquiring centres is high. The stock has trailed down from about $5.50 to $3.47 since last September after a long run-up. That decline has pushed G8 Education's yield up to a huge 6.3% fully franked. For Foolish investors, that is an attractive combination of dividend income and long-term growth.
