After a torrid month of trading on the ASX, the start of calendar year 2016 will undoubtedly have unsettled quite a few investors.
There is always a silver lining that comes from volatility and lower prices however – your universe of investment opportunities expands!
While volatility is indeed caused by investors adjusting their expectations and it's reasonable that new information can lead to new valuations; rather than being dismayed by volatility, long-term investors should welcome the opportunity that lower prices create.
For long-term investors wishing to add high-yielding dividend stocks to their portfolio, recent price falls may have increased the appeal of a number of blue-chip stocks based on analyst consensus data for financial year 2016 dividend distributions.
Here are five companies that could be worth considering:
- Telstra Corporation Ltd (ASX: TLS): fully franked dividend yield of 5.7%
- Commonwealth Bank of Australia (ASX: CBA): fully franked dividend yield of 5.5%
- Suncorp Group Ltd (ASX: SUN): fully franked dividend yield of 7.1%
- Aurizon Holdings Ltd (ASX: AZJ): partially franked dividend yield of 6.8%
- AMP Limited (ASX: AMP): partially franked dividend yield of 6%
Make sure the dividend is maintainable
Perhaps the single-most important factor income-seeking investors need to focus on is the sustainability of a stock's yield.
For example, while BHP Billiton Limited (ASX: BHP) has a trailing yield of almost 11%, its forecast yield is much lower at 6.1% and given the decline in commodity prices there would appear to be risks to the downside on this forecast yield.
In contrast, investors can hold a very-high level conviction in Telstra's ability to meet market expectations for a 31.5 cent dividend in 2016 and arguably a similar level of conviction could be held for the other four stocks identified above.
