With interest rates having been cut already this year, many Aussie savers and investors are looking for ways to boost their income. That's understandable, since the outlook for interest rates during the rest of the year is somewhat dovish, with the real return (i.e. after the effects of inflation have been removed) on cash balances likely to be squeezed even further over the medium term.
As a result, companies that pay generous dividends have seen investor sentiment in them improve in recent months. However, this does not mean that it is too late for you to get involved and bag yourself a number of top quality companies that not only pay a great yield, but also have upbeat dividend growth prospects, too.
Here are three prime examples that could make a real difference to your income in 2015 and beyond.
Telstra Corporation Ltd
As well as yielding a fully franked 4.7%, Telstra Corporation Ltd (ASX: TLS) is expected to increase dividends per share by 5.7% next year. If met, that would come after it has increased them by 5.4% last year, with Telstra's focus on building its Asian operations being a key reason why it can afford to become more generous regarding shareholder payouts. After all, there is little scope for a higher payout ratio, since Telstra currently pays out around 86% of profit as a dividend.
This generosity, though, should not worry investors in Telstra, since it has a sound balance sheet and plenty of financial firepower to reach its goal of growing its operations across the emerging world.
Suncorp Group Ltd
As well as a superb headline yield of 6%, Suncorp Group Ltd (ASX: SUN) is also expected to increase dividends per share at an annualised rate of 13.7% over the next two years. A key reason for it being able to do so is improving profitability, with the diversified financial company's bottom line forecast to rise by 7.5% next year.
And, even though it trades on a similar price to earnings (P/E) ratio to the ASX of 16 (versus 16.8 for the wider index), its strong growth prospects mean that it has a price to earnings growth (PEG) ratio of just 0.46. Furthermore a beta of 0.88 means that its share price should be less volatile than the ASX, with it being expected to change by 0.88% for every 1% movement in the wider index.
Macquarie Group Ltd
On the face of it, Macquarie Group Ltd's (ASX: MQG) yield of 3.6% looks disappointing. After all, it is less than the ASX's yield of 4.3%. However, the investment bank is expected to raise dividends per share from $3.10 to $3.49 over the course of the next year, which at its current price puts Macquarie on a forward yield of 4.5%.
Of course, such a strong growth in dividends per share is hardly a surprise, since Macquarie has increased shareholder payouts at an annualised rate of 15.6% over the last five years. And, with its bottom line forecast to grow at an annualised rate of 16.7% over the next two years, Macquarie could prove to be an excellent income stock over the medium to long term.
