Even though the RBA decided to keep interest rates on hold at 2.25% this week, most investors would agree that cuts are probable, rather than possible, over the medium term. That's because the Aussie economy continues to stutter, with lower commodity prices making things even more challenging for hardworking families across the country.
As a result of a lower interest rate, investor sentiment for high-yielding shares could improve significantly. Clearly, savings rates are pretty disappointing right now, but they could get much worse, thereby pushing investors to buy income stocks in order to negate the effect of even lower returns on cash balances.
And, with this in mind, here are three stocks that offer great yields, which could see their share prices move higher as a result of improved investor sentiment.
Amcor Limited
Shares in Amcor Limited (ASX: AMC) have disappointed somewhat in 2015, being up 5% versus a gain of 9% for the ASX. However, the company has tremendous international expansion potential, as evidenced by its recent acquisition of South Africa-based Nampak Holdings for around $22m. This provides Amcor with a platform for growth in Africa, with Nampak being the market leader in flexible packaging in South Africa.
In addition, Amcor has a yield of 3.2% at the present time and, looking ahead, it is forecast to increase dividends per share at an annualised rate of 14.3% over the next two years. This puts it on a forward yield of 3.9%, with its relatively robust operating history also providing investors with a significant amount of stability.
Transurban Group
On the face of it, Transurban Group (ASX: TCL) may seem like a 'slow but steady' type of business. After all, toll roads may not be viewed as the most exciting of spaces to invest in. However, research conducted by Transurban shows that congestion in cities such as Melbourne and Sydney is heading towards being some of the most challenging in the world. And, through dynamic road pricing, Transurban could benefit in the long run, with users seeming to favour a 'pay as you drive' system.
In the nearer term, Transurban is expected to grow its bottom line at an annualised rate of 27.5% during the next two years. This should allow it to grow dividends per share by 11.6% per annum over the same period, which puts it on an appealing forward yield of 4.6%.
AMP Limited
While AMP Limited (ASX: AMP) has a rather rich price to earnings (P/E) ratio of 20.6 (which is considerably higher than the ASX's P/E ratio of 16.7), its future prospects are strong, with it being forecast to increase earnings per share from $0.29 last year to $0.43 next year. This should allow it to increase dividends per share by 9.8% per annum over the next two years, which puts AMP on a forward yield of 4.8%.
Clearly, AMP is a relatively volatile stock to own; as evidenced by its relatively high beta of 1.6. However, with AMP being able to reduce its cost to income ratio from 49% in 2013 to 45% last year, its future as an income stock seems bright.
