There’s been an understandable trend toward large blue-chip stocks such as Telstra Corporation Ltd (ASX: TLS) and the major banks over the past few years in response to the continued loosening of monetary policy by the Reserve Bank of Australia (RBA).
With the cash rate currently at just 2% and few signs that the RBA is in any sort of rush to raise rates, it is likely that investors will continue to demand high-yielding stocks for some time yet.
While many investors are more comfortable holding large, blue-chip stocks; for investors looking for even higher yield options potentially with the added bonus of greater capital gains as well, there are a number of opportunities amongst smaller, lesser followed and unloved stocks.
Here are three worth considering…
- Myer Holdings Ltd’s (ASX: MYR) share price is currently selling at record low levels and while the business does face a number of headwinds, the leading department store operator is still forecast to pay a dividend of around 9 cents per share (cps) in the current financial year. This equates to a fully franked dividend yield of 7%.
- Prime Media Group Limited (ASX: PRT) is also trading near record low levels. The group operates a number of regional free-to-air broadcast networks, which have been buffeted by structural shifts to the internet. While these structural headwinds will most likely persist, a steady dividend of 7 cps is forecast which places the stock on an expected fully franked yield of 10.4%.
- G8 Education Ltd (ASX: GEM) is a leading provider of childcare services and for the most part has enjoyed a stellar run since listing. A recent 32% pull back in the share price dropping over the last 12 months could be offering investors an attractive opportunity. Based on data from Morningstar, G8 is forecast to increase its dividend to nearly 25 cps this financial year, implying a fully franked yield of 7.3%.
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Motley Fool contributor Tim McArthur has no position in any stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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