Despite the RBA failing to cut official interest rates on Tuesday, the fact is interest rates are still at record lows and the sharemarket looks like a good place to park your excess capital.
After all, the imputation system gives both high and low-income earners the ability to generate meaningfully superior returns compared to other assets like cash, or property.
For those with a Self-Managed Superannuation Fund (SMSF), fully franked dividends are a big selling point for the local sharemarket. That's why you should add these five fully franked dividend-paying stocks to your SMSF's watchlist.
Rio Tinto Limited (ASX: RIO) is Australia's largest iron ore producer. The dual-listed miner recently pledged to "increase returns to shareholders" despite plunging commodity prices. In addition to its share buyback, analysts are forecasting a fully franked dividend equivalent to a yield of 5%, to be paid to shareholders in the next year.
Telstra Corporation Ltd (ASX: TLS) is one of the ASX's best dividend stocks and Australia's leading telecommunications company. In addition to investing in Asia the $75 billion company is expected to pay a fully franked dividend of 4.91% over the next 12 months.
Woolworths Limited (ASX: WOW) is the leading supermarket operator throughout the domestic market, and owner of retail brands such as BigW, Dan Murphy's and Masters. Following heavy share price falls over the past year, Woolies shares now offer a 5% fully franked dividend yield.
Ruralco Holdings Ltd (ASX: RHL) is a diversified agribusiness which today went ex-dividend. Meaning, shareholders on the company's registry as of last night will be entitled to its most recent dividend payment. Although analysts expect Ruralco's profits to retract slightly in the year ahead, it's currently forecast to pay a dividend equivalent to 4.9% fully franked.
Cash Converters International Ltd (ASX: CCV) is another $300 million company which offers a great dividend yield. The payday lender and pawn broker is being tipped to announce lower earnings per share (EPS) in financial year 2015, but analysts are forecasting a fully franked yield of 5.7%.
Should you buy, hold or sell these stocks?
When picking dividend stocks, it's imperative to focus on more than the forecast yield alone, and thoroughly research the underlying business. Despite its pledge for increased returns to shareholders, personally I wouldn't buy Rio Tinto shares at today's prices. In addition, I think both Ruralco and Telstra appear worthy of a hold.
