4 high-quality dividend stocks that smash term deposits

I received a notification from my broker recently – actually I didn’t, it was sneakily appended to the transaction list in my cash account – that said the interest rate on my deposits had been slashed again, from 2.4% to 2.15%.

In the past few years, the return on my cash has virtually halved as the Reserve Bank of Australia continues to slash interest rates. Fortunately, high-yielding dividend stocks seem more common than ever, with even Telstra Corporation Ltd (ASX: TLS) and Commonwealth Bank of Australia (ASX: CBA) yielding more than 5.5% at today’s prices.

Yet Australia’s banks and telcos face their headwinds in the near future, and would not be my top picks for dividends today. Here are five growing businesses that I would happily hold in my portfolio:

Retail Food Group Limited (ASX: RFG) is the master franchisor for a number of well-known Australian brands like Donut King, Gloria Jean’s, Brumby’s, Michel’s Patisserie, and more. It’s also one of the largest coffee roasters in Australia and has delivered strong rewards to shareholders in recent times. Although it carries some debt, it doesn’t appear overly expensive today and pays a 4.2% fully franked dividend.

Flight Centre Travel Group Ltd (ASX: FLT) is a global travel consultant with virtually zero debt, a big pile of cash, and operations in 11 countries. Although shares have fallen out of favour recently, the company continues to make strides in advancing its niche travel services as well as growing its global footprint. Flight Centre appears to be lower risk, plus it’s cheap and pays a 4.4% fully franked dividend.

FlexiGroup Limited (ASX: FXL) is a consumer leasing and interest-free specialist that has been recently marked down by the market over fears of greater regulation or rising bad debts. Those willing to look at the company in depth might conclude that much of the downside is already priced in, while FlexiGroup’s ongoing operations comfortably cover today’s 6.2%, fully franked dividend.

Blackmores Limited (ASX: BKL) may be a surprising inclusion whose $110 price tag could turn off the dividend investor. Yet with minimal debt and attractive growth prospects in south-east Asia, Blackmores could easily see its dividends grow much faster than the above three companies. Although the share price has fallen heavily over some market fears about the current quarter’s sales, the selling looks to be overdone and Blackmore’s 4% fully franked dividend looks appealing.

If you are interested in quality dividend shares, then I would also recommend this top dividend share. A strong yield and potential share price gains make it another great investment idea in my opinion.

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Motley Fool contributor Sean O'Neill owns shares of Flight Centre Travel Group Limited and Retail Food Group Limited. The Motley Fool Australia owns shares of Retail Food Group Limited. 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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