The probability of another RBA rate cut bumped up with the continued decline of iron ore prices. Iron ore fell through the US$50 a tonne mark and the downslide will probably not stop there. As Australia's biggest export, lower prices can lead to less money coming into Australia, just at a time when the economy has to find its legs without the wide support of the mining industry.
Experienced shareholders know this will make stocks even more attractive, especially for blue-chips and smaller high-yield stocks. Here are three stocks that offer juicy yields at a decent price.
Large-Cap stocks
Among large-cap stocks I would look toward Suncorp Group Ltd (ASX: SUN) and Telstra Corporation Ltd (ASX: TLS). Both companies are going through structural changes in business.
Telstra is remodeling itself to be a leader in cloud application and data management, expanding its role in telecommunications and business enterprise solutions. Its e-health division is another fast-growing area which has great long-term potential. The company will be getting millions of dollars in annual payments over many years in return for turning over its phone network infrastructure for the NBN rollout. Telstra may even get contracts for the network maintenance, adding another income stream to help fund expansion plans. The healthy 4.7% fully franked yield makes owning Telstra all the more attractive.
Insurer and banker Suncorp Group is also reshaping how it does business by narrowing down the number of different insurance products that it offers through its numerous brands like AAMI, Vero, Shannon's and GIO. Updating computer systems and moving more of its business into cloud-based network operations is being supported by savings from the insurer's simplification program.
Along with the large amount of surplus capital accumulated recently, the cost savings could boost dividend growth for a number of years. Currently, the fully franked 6.1% yield should be strongly considered by dividend investors.
Mid-cap stocks
Following mid-cap stocks for dividend income is smart because it may be possible to pick up tomorrow's blue-chips today if you do careful stock picking.
Navitas Limited (ASX: NVT) is a $1.7 billion education services provider for university preparation, vocational and professional training, as well as languages. Operating in 27 countries, it trains and educates over 80,000 people through its own education centres and in conjunction with established universities. Analysts expect Navitas to grow annual earnings in the mid-teens over the next few years. Dividends should grow steadily as well. The stock yields 4.8% fully franked and trades at 19 times forecast earnings, so that's a good balance between share price and projected growth.
