Interest rates are low…
…and likely to stay this way for some time because the mining boom is over and the non-mining sector is struggling.
That means, in order to spur growth, the RBA will keep rates lower for longer.
So investors can expect the poor returns from term deposits, bonds and fixed interest to continue into the foreseeable future.
Whilst low interest rates are usually a boon for property speculators, unless you've got a million dollars ready to invest, chances are you'll find it tough to bag a bargain.
However the Australian sharemarket, or ASX, also benefits from low rates.
Companies fund projects using cheap debt which boosts profits and, ultimately, increases shareholder returns.
Moreover dividends yields over 4% are an easy find in the sharemarket.
Add in tax-effective franking credits, 50% capital gains tax exemptions after one year of shareholding and its little wonder why so many Aussies are turning to the local sharemarket for their passive income.
3 big dividend stocks for your watchlist
Unfortunately, with over 2,000 stocks listed on the ASX, knowing where to start can be a daunting task.
So with that in mind, here are three popular dividend stocks to add to your watchlist today…
- Telstra Corporation Ltd (ASX: TLS) is already Australia's leading telecommunications company but is currently targeting one third of group revenues from Asia by 2020. In addition internet-enabled devices are becoming more entwined in our everyday lives and data usage is set to grow strongly in the years ahead. This provides a healthy long-term tailwind behind Telstra's earnings power. It is currently sporting a fully franked dividend yield of 4.71%.
- Sky Network Television Ltd (ASX: SKT) is New Zealand's dominant pay-tv operator with household penetration of around 48%. Since reporting a strong half-year result, Sky Network shares have drifted slightly higher. Whilst the group cannot offer franking credits to Australian investors, its very reliable 4.8% payout is forecast to grow healthily in years ahead.
- Woolworths Limited (ASX: WOW) may be facing intense competition from local and foreign rivals, however, there's a chance the selloff of its shares has been overdone. Indeed, investors choosing to buy Woolworths shares at these prices will not only enjoy the relative safety of holding a blue-chip stock, but are forecast to receive a fully franked dividend equivalent to a yield of 4.7%.
Buy, Hold or Sell
