Lower interest rates are great, except when you're a retiree or another individual who relies on regular interest payments as a form of income.
With the Reserve Bank of Australia tipped to cut interest rates even further in 2016 – possibly to a record low of 1.5% – it has arguably never been more important for those individuals to put some of their money to work in high-yielding, fully franked dividend stocks.
Although none of Australia's Big Four banks looks particularly compelling today, there are a number of reliable alternatives retirees could certainly consider buying to bolster their income.
Top 3 Fully Franked Shares for 2016
Reliability and resilience are two important factors for any investment, and Wesfarmers Ltd (ASX: WES) has certainly proven its worth in each of those regards since its humble beginnings in 1914. The diversified business is now the proud owner of Coles supermarkets, as well as Bunnings Warehouse, Kmart and Officeworks (and plenty more) with strong cash flows and a defensive earnings stream (indeed, people still need to eat, no matter what is happening in the economy). What's more, the shares trade on a forecast 5.2% fully franked dividend yield, or 7.4% when franking credits are included.
There's also little wonder why Telstra Corporation Ltd (ASX: TLS) is one of Australia's most widely-held companies. Not only has the telecommunications giant been one of the ASX's most reliable and top-performing blue-chip stocks over the last five years, it also has plenty of growth potential which could make it a very good buy at today's share price — around $5.50. Better yet, Telstra enjoys strong margins and cash flows which have helped make its legendary fully franked dividend yield possible. It currently offers a 5.6% fully franked dividend yield, or 8% grossed up.
Retirees could also look at Flight Centre Travel Group Ltd (ASX: FLT) as a source of great dividends, and potentially some reasonable capital gains as well. Although the travel agent's shares have hit turbulence recently, its balance sheet continues to strengthen with more than $564 million cash on hand as at 30 June 2015. While the company could pursue acquisitions to grow, it also makes it a pretty safe bet as far as dividends are concerned. Indeed, dividends have grown at 12.6%, compounded annually over the last five years, with further growth expected this financial year. The shares offer a forecast fully franked yield of 4.1%, grossed to 5.8%.
