The AFR has reported that Morgan Stanley believes that the declines could be worse because of weakening sentiment, tight credit and oversupply continuing to hit residential markets

Previous expectations for the property declines generally ranged from 10% to 15%, however these days most projections are for a fall of between 15% to 20%. This is bad news for the big banks of Commonwealth Bank of Australia (ASX: CBA), Westpac Banking Corp (ASX: WBC), Australia and New Zealand Banking Group (ASX: ANZ) and National Australia Bank Ltd (ASX: NAB).

Many economists are predicting that the RBA's next move will now be down not up, in-fact Morgan Stanley are watching several key factors, including debt levels, which could impact the economy and may necessitate a interest rate drop.

Morgan Stanley said "There is evidence of a consumer pullback over Christmas but jobs impact will be key for any negative feedback loop to push Australia into a balance sheet recession".

Retail and property construction activity are two major areas where a decline could tip Australian into recession. Tamawood Limited (ASX: TWD) and Kathmandu Holdings Ltd (ASX: KMD) are just two ASX businesses to warn recently of poorer conditions.

The already-declining property prices and pressure in the Royal Commission has seen the major banks significantly increase their lending checks and reduce investor demand.

As long as the Australian unemployment rate doesn't suddenly spike then Australia shouldn't suffer too hard. I think it speaks of how strange economics is when a 95% employment rate is great for the economy but 90% is truly terrible.

Foolish takeaway

With Sydney and Melbourne house prices falling at an annualised rate of around 20% in December 2018, it seems quite likely that we will hit the 15% peak to trough fall level this year.

The post Property price declines could be twice as bad as expected appeared first on The Motley Fool Australia.

In an announcement today, Tamawood's chairman flagged a long list of complaints about conditions in Australia's housing markets, including:

• That land prices have not fallen in line with house prices
• the Royal Commission had left potential customers "unable to obtain finance"
• the Labor party's policy on banning negative gearing was hurting investor confidence
• The Queensland Building and Construction Commission's changes to regulations were hurting homebuilders
• The change in prime minister in Australia hurt confidence
• The wet weather deterred buyers

The company also admitted it was "too slow" to adjust to the changing conditions in Australia's housing markets, but reminded investors it has no debt and has been able to ride out property market cycles for 28 years.

It also reported that the interim dividend was likely to remain at 11 cents per share, but that the final dividend was likely to be cut due to the weaker performance.

Elsewhere the big home loan lenders like National Australia Bank Ltd (ASX: NAB) could be forced to cut dividends if their profits are hurt by rising costs and slower credit growth.

The post Homebuilder Tamawood just warned of a 'perfect storm' for Australian house prices appeared first on The Motley Fool Australia.

Four shares that have failed to follow the market higher today are listed below. Here's why they have started the week in the red:

The Healius Ltd (ASX: HLS) share price has dropped 4% to $2.64 after the healthcare company's board rejected a $3.25 cash per share takeover proposal from Jangho Hong Kong Limited. The Healius board unanimously believes that the proposal is opportunistic and fundamentally undervalues the company. It believes strategic initiatives that are underway will create greater value for shareholders.

The Macquarie Telecom Group Ltd (ASX: MAQ) share price has tumbled 3% to $20.22 despite there being no news out of the telecom and data services company. However, Macquarie Telecom's shares are not the most liquid on the market, so swings of this nature can happen from time to time, not least on low volume days like today.

The St Barbara Ltd (ASX: SBM) share price has fallen over 4% to $4.78. St Barbara and the rest of Australia's gold miners have dropped deep into the red today after investors gained an appetite for risk again and drove the spot gold price 1% lower over the last 24 hours. The S&P/ASX All Ords Gold index is down 2.2% at the time of writing. Northern Star Resources Ltd (ASX: NST) and Evolution Mining Ltd (ASX: EVN) are also acting as drags on the gold miners index.

The Tamawood Limited (ASX: TWD) share price is down 4% to $3.65 after the home building company announced a further downgrade to its profit guidance. Due to a "Perfect Storm" of negative factors, profit is expected to be down 26.9% in the first half of FY 2019. However, management believes the company is well placed to ride out the storm.

The post Why Healius, Macquarie Telecom, St Barbara, and Tamawood shares are sinking lower today appeared first on The Motley Fool Australia.

The company said in an ASX release 'The board can now confirm the interim fully franked dividend of 11 cents for 1HFY18. The board gives guidance that a final fully franked dividend of 16 cents for 2HFY18 consistent with FY17, subject to no unforeseen circumstances and a continuation of current prevailing market conditions. Sales remain ahead of FY17.'

Tamawood also advised that net profit before tax is down approximately $400,000 compared to the first half of FY17 subject to audit review and final half-year adjustments.

The decrease was blamed on 16 continuous days of inclement weather and an increase of compliance costs due to the new regulatory regime of the QBCC.

Tamawood also gave an update on its 23% investment in Senterprisys. It said that most of the new modules of the enterprise software have been completed and is now being tested. The new system will enable the business to expand its franchise network over the next year to 18 months.

The post Tamawood Limited confirms huge dividend yield of 9.48% appeared first on The Motley Fool Australia.

Listed below are three which caught my eye. Can they still go higher from here?

The NIB Holdings Limited (ASX: NHF) share price touched on another all-time high of $6.18 in early trade. Investors have been fighting to get hold of its shares in the last few months and it isn't hard to see why. Thanks to market share gains and policyholder growth, NIB Holdings recently reported a massive 65% increase in half-year net profit after tax to $71.1 million. As impressive as this performance has been, at almost 22x trailing earnings I think the private health insurer is starting to look a little expensive.

The Tamawood Limited (ASX: TWD) share price climbed to a new high of $4.07 today, bringing its year-to-date return to just over 10%. As well as posting a solid first-half result, management recently advised that the second-half had started equally strong. As a result it expects full-year profit to be 20% higher year-on-year subject to there being no adverse weather. Pleasingly the Queensland-based homebuilder reported this week that Cyclone Debbie has had no impact on the business. At just over 12x trailing earnings I think Tamawood looks attractive for the level of growth it is producing.

The Updater Inc (ASX: UPD) share price has continued its great run and has climbed to an all-time high of 77 cents during morning trade. Today's gain means the US-based technology company's shares have now risen a remarkable 340% since this time last year. Updater provides a platform designed to simplify the process of moving house. It connects companies such as real estate agents and mortgage brokers, while coordinating mail forwarding, logistics, and record updating for customers. The company recently announced 345,899 quarterly moves, which equates to market penetration of approximately 9%. With figures like that, I think Updater is worth keeping a close eye on.

The post These 3 ASX shares just hit all-time highs: Are there more gains ahead? appeared first on The Motley Fool Australia.

Vita Group Limited (ASX: VTG)

Shares in this mobile phone retailer have risen 1,254% over the past five years. Its success is due to three factors.

• The rise of smart phones
• A partnership with Telstra Corporation Ltd (ASX: TLS) which has enabled Vita to leverage the ubiquitous Telstra brand
• Focused investment in employees fostering a sales culture characterised by exceptional customer service

Despite the company's success, the market periodically gets spooked when Vita renegotiates terms with Telstra. Now is one such time and so it is currently possible to buy Vita shares with a trailing fully-franked dividend yield of 5.4%.

Tamawood Limited (ASX: TWD)

Many commentators suggest that Australia is experiencing a housing bubble which might explain why shares in this Queensland based house-builder are trading so cheaply. The stock currently pays a full-franked dividend yield of 6.6%.

Whilst I tend to agree that house prices are unsustainably high, I am also confident that Tamawood will continue to prosper because of its low-cost business model and unleveraged balance sheet. The company is also making progress in expanding operations outside of Queensland and so the stock has plenty of growth potential.

Lovisa Holdings Ltd (ASX: LOV)

This seller of jewellery and accessories delivered superb results for the first half of 2017 thanks to impressive like-for-like sales growth of 12.6% and continued store rollout in Australia and overseas.

Revenue increased 20.7% to $99.7 million and net profit after tax (NPAT) surged 49.7% to $20.3 million. During the period, the company managed to put through price rises offsetting currency headwinds. The exit of a competitor also boosted sales and so it is unlikely that the company will deliver quite as strong growth next time.

Lovisa is a quality business which generates very high returns on capital and one of the company's key strengths appears to be the price point of its products. It sells affordable yet fashionable jewellery, an easily justifiable low cost purchase which still delivers instant gratification to consumers. The company is basically following the highly successful "fast-fashion" concept used by Spanish retail heavyweight Inditex with its Zara chain but applying to a niche.

The stock pays a fully-franked dividend of 3.4% and is trading on a modest forward looking enterprise value-to-earnings (EV/E) ratio of 14.

The post 3 bargain consumer stocks to buy now appeared first on The Motley Fool Australia.

When choosing a dividend stock, the current dividend yield is less important than the ability of the company to maintain and grow its dividends in the future. On this score, all four of these little businesses do well. They all have low capital requirements enabling them to pay a high percentage of profits to shareholders each year. They also generate high returns on equity and have decent growth prospects.

All four companies pay fully franked dividends which means that there is no tax to pay on the dividend income that shareholders receive. This can be worth an additional 43% to the face value of the dividend for higher income earners in the form of reduced tax payments.

Two out of four companies are still led by their founders who also retain significant ownership stakes. The other two have founders with sizeable shareholdings sitting on their boards of directors. This ensures that shareholder and management interests are firmly aligned and could go some way to explaining the terrific long-term track records of these four companies.

So, without further ado, here are four of my favourite dividend shares.

Telecoms retailer Vita Group Limited (ASX: VTG) pays a 4.9% dividend yield which equates to 7% grossed up after accounting for tax benefits.

The company is run by founder and largest shareholder Maxine Horne and has thrived over recent years under a partnership arrangement with Telstra Corporation Ltd (ASX: TLS). With the era of connected devices upon us, strong demand for consumer IT and telco products and services looks set to continue which should be good for Vita.

Following a difficult period during the GFC, Vita resumed dividends in 2011 when it paid out 3.1 cents per share. Dividends and profits have risen strongly since and over the last 12 months the company returned 17.4 cents to shareholders.

IT services provider Data#3 Limited (ASX: DTL) pays a 5.4% dividend or 7.8% on a gross basis.

Co-founder and former managing director Terry Powel is a non-executive director and until recently fellow co-founder John Grant was CEO before stepping down at the end of 2015.

Data#3 has an excellent long-term history of profitability as a listed company stretching back to the 1990s but between 2011 and 2014 it experienced a slump, with profits falling from $15 million to $7.5 million. This was partly to do with subdued investment following the GFC, but also relates to the rise of cloud computing and the commoditisation of IT.

Since 2014, Data#3 has recovered well and it seems this tricky period is now behind it. The company announced net profit after tax (NPAT) of $13.8 million last year and today boasts a thriving cloud computing business which grew revenues by 44.2% to $58 million in the first half of 2017.

The company paid dividends totalling 8.9 cents per share in the last 12 months up from 2.8 cents in 2006 (after adjusting for the 2011 share split).

IT distributor Dicker Data Ltd (ASX: DDR) pays a 6.4% dividend, 9.1% grossed up and is run by founder and major shareholder David Dicker.

As a distributor, the company earns thin gross margins of less than 10%, but has grown NPAT rapidly since listing in early 2011. It has done so whilst minimising dilution of shareholder equity thanks to smart use of debt by management.

In the first 12 months after listing, Dicker paid 3.9 cents out to shareholders. Over the last 12 months, the company returned 16 cents.

House builder Tamawood Limited (ASX: TWD) has a 6.6% dividend yield which equates to 9.5% grossed up. Founder and largest shareholder Lev Mizikovsky sits on the board of directors.

The Queensland-based company has recently expanded into New South Wales and has a growing franchise business spanning the east coast. Like the other companies listed above, Tamawood is a cyclical business that would likely suffer during a recession but is well run and has good long-term prospects.

Tamawood has a long-term history of increasing dividends. In 2006 the company paid out 13 cents, but over the last 12 months it returned double this amount to shareholders.

The post 4 SMALL-caps paying BIG dividends appeared first on The Motley Fool Australia.

Online travel agent Webjet Limited (ASX: WEB) announced growth in earnings-per-share (EPS) from continuing operations of 59.8% to 20.6 cents for the first half of 2017. Both its business-to-consumer (B2C) and business-to-business (B2B) offerings are growing strongly and the company seems to be unaffected by the issues plaguing its larger peer, bricks-and-mortar agent Flight Centre Travel Group Ltd (ASX: FLT).

Webjet is guiding for full-year earnings before interest, tax, depreciation and amortisation (EBITDA) from continuing operations of $61.1 million. Capital expenditure is expected to be $10.5 million and although the company has some $56.6 million of debt sitting on its balance sheet, this is comfortably covered by $95 million in cash holdings.

Given the above, I estimate the current annualised underlying net profit after tax (NPAT) run-rate of the business is about $35 million. Based on this forecast, the stock trades on a price-to-earnings ratio (PER) of just over 30. It also pays a dividend yield of 1.4%.

Blood plasma therapy and flu vaccine giant CSL Limited (ASX: CSL) reported a very impressive set of numbers for the latest reporting period. Underlying EPS at constant currency (CC) rose 38.6% to US$1.81 on the back of a 36.2% rise in underlying NPAT to US$827 million. It is quite common for small immature companies to deliver this sort of percentage growth, but very rare for companies as large as CSL which has a market capitalisation of $53.8 billion.

The company is guiding for full-year constant currency underlying NPAT growth of between 18% and 20% which implies full-year EPS of more than US$3 by my estimates. This translates to a PER of about 30 at current prices and the stock pays a dividend yield of 1.5%.

At the small end of the market, housebuilder Tamawood Limited (ASX: TWD) capped at just $100.4 million announced EPS growth of 34.4% for the first half of 2017. The result was even more impressive because last year's figures included an $0.9 million benefit from a legal settlement. This is a significant amount in the context of $3.3 million NPAT delivered in the same period.

It pains me to write about Tamawood because I used to be a shareholder. Despite being aware of its frugal management team, low share price and clear franchise growth strategy I decided to sell because I was worried about high house prices in Australia. I am regretting that decision today.

Hot on the heels of releasing its first-half results, Tamawood announced that it expects full-year profit for 2017 to be 20% above 2016. Like CSL, this forecast seems quite conservative since the first half was over 30% stronger and Tamawood also confirmed that the year to the end of February is tracking more than 30% ahead of last year.

Based on the 20% guidance figure, Tamawood currently trades on a PER of just over 10. It carries no debt and thanks to its capital light business model pays out a high percentage of profits as dividends. The company has a long track record of growing dividends and currently pays 26 cents per share each year, which equates to a yield of 6.6% at the current stock price.

The post 3 of the strongest company reports I saw this earnings season appeared first on The Motley Fool Australia.

No wonder investors are looking elsewhere for growth and income returns that are sustainable and at cheaper prices.

These four companies certainly aren't in the top 20, but all appear cheap. Here's a closer look…

Qantas Airways Limited (ASX: QAN)

Trading on a P/E ratio of 6.6x according to Google Finance, the airline has seen its share price drop from $4.25 to the current level of $3.24. Year-to-date, the share price has plunged more than 20%. That has come after the airline warned that it would have to cut capacity and a recovery in the oil price. The higher oil price means higher costs for the airline – which spends around $4 billion on fuel each year. But is the current price cheap? Certainly looks cheap – although I'm no fan of airlines – at any price.

Cedar Woods Properties Limited (ASX: CWP)

The property developer is currently trading on a P/E of just 8.4x – AND paying a dividend yield of 6.2% – fully franked. Cedar Woods has already told the market that it expects a similar profit in FY2017 as it made in 2016 – so investors can expect a similar dividend next year as well. The good news is that the company is not overloaded with debt, doesn't develop huge multi-storey apartment buildings – but focuses on community projects such as Williams Landing in Melbourne.

IVE Group Ltd (ASX: IGL)

The printing group and marketing company is the market leader in its sector and counts a number of huge companies as clients. Customers tend to hang around too, with its top 20 customers being with the company for an average of nine years. IVE's shares currently trade on a P/E of 9.3x – despite strong growth being forecast in the year ahead – and the company expects to pay a dividend yield of nearly 8% – fully franked.

Tamawood Limited (ASX: TWD)

Tamawood is a home builder that has a fantastic track record. An 18% average annual return to shareholders over the past decade is nothing to sneeze at. $10,000 invested in the company in 2006 would now be worth over $52,000. Today the company announced that its September quarter 2016 had seen an adjusted net profit after tax in excess of 20% of the previous year. That's a good omen for the 2017 financial year, but shares are still trading on a P/E of just 12.6x and paying a dividend yield of 6.3% fully franked.

The post Are these 4 cheap companies worthy of being in your portfolio? appeared first on The Motley Fool Australia.

If you were a day trader, you might go off and buy some CFDs, warrants or trade in an out of several stocks in the hope of generating a capital gain.

On the other hand, if you were retired and dependent on your super for income, you'd most likely stick a $5,000 windfall into the bank first. But with bank accounts offering measly interest rates, a better might be some high dividend yielding stocks on the ASX.

If you were new to the stock market, a prudent investment would be to say buy $5,000 worth of shares in one of largest and best listed investment companies Australian Foundation Investment Co.Ltd. (ASX: AFI). That would give you instant diversity at a low cost – and a very low chance of losing all your cash – all the while earning a decent 4.2% fully franked dividend.

Here's how I'd invest it given I don't fall into any of the above categories and if I was just starting to build a portfolio…

$1,000 each into mortgage broker Australian Finance Group Ltd (ASX: AFG) and home builder Tamawood Limited (ASX: TWD) for their juicy fully franked dividend yields of around 7%.

Another $1,000 would go into serviced office provider Servcorp Limited (ASX: SRV) and another $1,000 into franchisor Retail Food Group Limited (ASX: RFG) to provide generous growth and some income in the form of dividends.

For my final $1,000, I'd go with the Vanguard MSCI Index International Shares ETF (ASX: VGS), which gives me exposure to more than 1,500 of the largest companies in the world, including Apple, Alphabet (Google's parent), Amazon, GE and Nestle.

Foolish takeaway

For $5,000, that gives a nice mix of income, growth and international exposure and a good starting point for a portfolio.

The post How I'd invest $5,000 today appeared first on The Motley Fool Australia.

That's hard to beat, particularly from other blue-chip stocks, but the problem for investors chasing NAB's yield is that the banks are under pressure from a number of sectors. That includes higher funding costs, potentially higher capital requirements, a bad debt cycle that is starting to rise and exposure to a number of companies in the resources sector that could cost them millions.

Don't forget that NAB saw its cash earnings fall 3% for the June 2016 quarter.

As an example, Arrium and McAleese are both in administration and owe their bankers millions.

That means investors should look beyond NAB for strong dividend yields. Here are 3 alternatives…

Tamawood Limited (ASX: TWD)

Tamawood is an Australian home builder with an exceptional dividend record. Currently paying a fully franked dividend yield of 7.4% at the current price of $3.40 – which grosses up to more than 10%. Tamawood also has the potential to maintain that yield far into the future. The good news is that with a market cap of just $90 million, the company has zero coverage by mainstream analysts and is therefore flying under the radar.

Having just reported its 2016 full year results, Tamawood could be worthy of adding to your watchlist.

Dicker Data Ltd (ASX: DDR)

Dicker Data is a wholesale distributor of computer hardware, software, and related products. So far this year it has delivered a strong performance thanks partly to the success of new vendors introduced last year. In its recent half year results, Dicker Data posted a 13.2% increase in underlying net profit to $12.6 million and expects to achieve $35 million in pre-tax operating profit for the full year. Paying 3.85 cents per quarter also equates to a fully franked dividend yield of 7.8% – which grosses up to more than 11%.

Mortgage Choice Limited (ASX: MOC)

The mortgage broker and financial planning company recently reported dividends of 16.5 cents for the 2016 financial year (FY16). At the current price of $2.05, that equates to a dividend yield – fully franked – of 8% or 11.4% grossed up. Cash net profit was up 10.7% in FY16 too, and the company is rapidly growing its funds under advice and premiums, and now generates more than 10% of revenue outside of mortgage lending. Mortgage Choice says it expects to have another strong year in FY17.

The post Forget National Australia Bank Ltd: Here are 3 higher dividend stocks appeared first on The Motley Fool Australia.

These seven stocks are all flying under the radar of mainstream analysts, yet their relative valuation ratios mostly suggest they are cheap.

Fiducian and OTOC reported yesterday, and their results were outstanding.

Fiducian, the wealth management business, yesterday reported a 22% increase in underlying net profit to $7 million for the 2016 financial year (FY16), and a 25% increase in its dividend to 12.5 cents. The company also has $9.7m of cash in its bank account and trades on an undemanding P/E ratio of 13x.

OTOC offers surveying, planning and design services to many sectors including government. The company also reported yesterday and delivered a 246% increase in underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to $16.2 million as revenues went close to doubling compared to FY15.

Dicker Data and Tamawood we have both covered in more detail previously, but the former still trades on a prospective P/E of ~11.6x and Tamawood recently reported double-digit growth in earnings per share.

Joyce and FSA group I covered in more detail last month, but both still look attractive at current prices.

ICSGLobal is a software business primarily supplying billing software in the UK for healthcare professionals. At its half year result earlier this year, ICSGLobal saw profit increase 30%, and upped its interim dividend by 33% and still trades on a prospective P/E ratio of around 14.6x.

Foolish takeaway

Focusing on the smaller end of the market can see investors thrash the overall market return, as smaller companies have the ability to generate enormous growth the big end of town simply can't.

The post 7 small cap bargains I'd buy right now with $7,000 appeared first on The Motley Fool Australia.

That's a shame when many managed funds struggle to beat the market on a consistent basis over long periods of time. Most of those are closet index-huggers, who hold stocks almost representative of a much-lower cost index fund.

Firstly, SMSF trustees that are looking to invest in managed funds – make sure you look for those managers with solid track records and those that invest in their own funds. Research shows that those funds tend to post better returns than those with no skin in the game.

Secondly, for those SMSF trustees that still want to invest directly into high dividend stocks, here are four companies that I think are worthy contenders.

Insurance Australia Group Ltd (ASX: IAG)

The insurer has a good track record of paying consistent fully franked dividends, currently around 4.8% at a share price of $6.04. With a stable chock full of well-known brands, including NRMA Insurance, SGIO, SGIC, CGU and Swann Insurance, IAG has taken some baby steps into Asia.

The company tends to stick to what it knows – which is general insurance for things like cars, caravans, boats bikes and homes. That's good news for investors and IAG should be a good income stock for many years to come.

Flight Centre Travel Group Ltd (ASX: FLT)

Flight Centre is currently paying a 4.7% fully franked dividend, although franking may fall as the travel agent generates a larger portion of earnings from offshore. With no debt, sensible management who own a significant portion of the company alongside shareholders and growing revenues, Flight Centre has paid consistent dividends for many years. That is likely to continue – and grow over time too.

Tamawood Limited (ASX: TWD)

Tamawood is an Australian home builder with an exceptional dividend record. Currently paying a fully franked dividend yield of 7% at the current price of $3.55 – which grosses up to 10% – Tamawood is likely to maintain that yield far into the future. The good news is that with a market cap of just $90 million, the company has zero coverage by mainstream analysts and is therefore flying under the radar.

Having just reported its 2016 full year results, Tamawood could be worthy of adding to your watchlist.

G8 Education Ltd (ASX: GEM)

The childcare centre operator is currently paying a fully franked dividend yield of 6.7%. Even better is that the company pays its dividends out quarterly rather than every six months if you need regular income. With further potential to consolidate and grow its share of the childcare market, G8 Education has the ability to grow its dividends over time. That's an important consideration and could see you handily beating the returns from the market or managed funds.

The post 4 top fully-franked dividend stocks for your SMSF appeared first on The Motley Fool Australia.

If you can get hold of any shares in the property developer that is.

Just 4,900 shares from one seller were up for sale as I write, despite 8 buyers offering to buy more than 80,000.

The company clearly struggles with liquidity in its shares, but patient investors might want to keep an eye on the company for a number of reasons outlined below.

• With a market capitalisation of just $188.5 million and a net profit of $84.3 million, it effectively means Payce shares are trading on a P/E ratio of 2.2x. By comparison, the market averages around 15x, with cheap shares often having P/E ratios under 10x.
• The company says its net tangible assets per share at the end of June 2016 is $10.16, compared to its current share price of $9.50.
• Chairman Brian Boyd, holds 9.9 million ordinary shares – around 49% of the total issued and 1.245 million preference shares.
• There is a proposal to take the company private from entities associated with Brian Boyd, offering $12.60 per share in cash, an unsecured 6.5% 2-year Note or any combination of both. At the current share price of $9.50, that's a 33% potential gain – if you can get hold of shares that is. And by the way, those 4,900 shares current for sale, the seller wants $12.40 for them each.

The one major issue is that there are 9.9 million outstanding preference shares which appear to be in limbo – with no offer appearing for them.

There are also some other issues that mean Payce is probably not the cheapest stock on the ASX. For one, the net profit of $84.3 million includes $72 million of paper gains on investment property and a one-off sale of an investment which realised $31.6 million.

Still, the 32% potential gain (if investors could buy shares in the company at the last traded price of $9.50) appears tantalising. However, it's unlikely that current shareholders will sell out for much less than the offer price and investors might never be able to get their hands on enough shares at the right price to make a profit.

For those wanting exposure to the property market, Tamawood Limited (ASX: TWD) is a much easier, more liquid investment, while Cedar Woods Properties Limited (ASX: CWP) also appears cheap and both are paying big fully franked dividends.

The post Is this the cheapest stock on the ASX? appeared first on The Motley Fool Australia.

Revenue rose 6.7% to $101.8 million on the back of a 12.3% increase in construction revenue and earnings-per-share (EPS) were up 25.5% to 31.5 cents. The company maintained its dividends for the year at 25 cents, representing a 7.9% fully franked yield at current prices. Tamawood is debt free and finished the period with $2.6 million in cash.

The company discloses in the Chairman's Report that profit would have been higher without one-off costs relating to the closure of offices in Melbourne and Adelaide during the year. However, the result was also boosted by a one-off $850,000 settlement relating to a legal dispute and the details of this are contained in the notes to the financial statements.

No information was provided in the annual report about the reasons for divesting the Melbourne and Adelaide operations which were previously part of the company's expansion plans. In February's half year report, the company said that it would look to franchise Melbourne and Adelaide over the following 12 months to 18 months.

Tamawood's expansion into New South Wales is going well with revenue up 54.7% to $10.9 million for the year. It plans to open more offices in New South Wales over the next twelve months which should drive further revenue growth.

The franchise division's external revenue fell 37.0% to $1.0 million for the year. The weak result was due to poor market conditions in regional Australia thanks in part to the mining downturn. In its half year report, the company said that it had chosen to run a number of coastal franchises that were coming to the end of their term directly through its Brisbane and Sydney offices.

In February 2016, Tamawood announced a 30% rise in year-to-date sales which should set the company up for a strong 2017.

The company also anticipates that it will launch its Resiweb software product in the next year and that this will have a positive impact on the franchise division. Internal use of the product has contributed to Tamawood's tight cost control and the company now hopes to further monetise the software through external sales.

With an exceptional dividend yield, Tamawood could be worthy of adding to your watchlist.

The post Tamawood Limited reports: What you need to know appeared first on The Motley Fool Australia.

The company also reiterated that it will pay total dividends of 25 cents for the year which represents an attractive 7.8% yield before franking credits at current prices. The high yield may be because the company operates in an out-of-favour sector as many believe that current high house prices are unsustainable.

Despite this, Tamawood is forecasting continued growth into 2017 as strong 2016 sales flow through. Meanwhile costs remain tightly controlled and the company attributes this in part to its use of Resiweb enterprise software, a product designed for small house builders.

The company increased its interest in Resiweb Limited which owns Resiweb software to 23.4% during the 2016 financial year, up from 19.4% in 2015. Resiweb is based on in-house software developed over 20 years by Tamawood and will soon be released for commercial sale.

Tamawood is looking to grow its Australian business through a franchise model and Resiweb could boost the company's appeal to potential franchisees. The company could also benefit from its share of Resiweb profits should the software be successful.

Resiweb Limited was spun out of Tamawood in 2012 by way of an in-specie distribution to Tamawood shareholders on a one for one basis. It subsequently acquired Tamawood Research and Development Pty Ltd from Tamawood in 2014 in return for a 19.4% ownership stake.

Director Lev Mizikovsky owns 48.7% of Tamawood and is also the chairman of Resiweb Limited. Tamawood's interest in Resiweb Limited was not considered to be material in the company's 2015 annual report.

Tamawood enjoys a competitive advantage in the form of its low cost model. Wages as a percentage of revenue were just 6.2% in 2015 versus a 2012 industry average of 16.6% according to Housing Industry Australia Ltd data.

This may explain the company's decent track record as a listed entity with its share price rising 101.3% over the last 10 years and dividends paid representing an additional 145.3% return. Whilst Tamawood would likely suffer in an adverse housing market, it should cope better than most of its competitors given its successful history and the fact it is debt free.

The post A huge dividend share to buy today: Tamawood Limited appeared first on The Motley Fool Australia.

I wrote last week why dividend-paying stocks tend to outperform those companies that choose not to pay dividends, and that's why I prefer companies that pay you to own them.

And in this low-interest rate environment when bank deposits will be lucky to pay you 2.3% (excluding bonus interest), finding and investing in shares with dividend yields of more than 5% fully franked is a virtual no-brainer.

Here are three companies that are often overlooked by investors but pay out wonderful dividends.

Retail Food Group Limited (ASX: RFG)

One of Australia's leading franchisors with major brands including Gloria Jeans, Donut King, Michel's Patisserie, Esquires, Pizza Capers and Crust Gourmet Pizza, Retail Food Group current sports a dividend yield of 4.5%, fully franked. But thanks to strong earnings growth, the dividend yield could jump to as much as 5.4% (or 7.7% grossed up for franking credits) in the next year.

Tamawood Limited (ASX: TWD)

Tamawood is a home designer selling houses through its Dixon Homes brand, and has been able to generate impressive returns – even when the housing market slumped to a 20-year low in 2001, following the introduction of the GST in 2000. Boasting a dividend yield of 8.4% – which grosses up to 12% when you include franking credits, Tamawood shares are also trading at a cheap price. Amazingly, Tamawood has an average dividend yield of 9.7% over the past decade according to Commsec.

Shriro Holdings Ltd (ASX: SHM)

Shriro is a distributor of kitchen appliances, fititngs and fixtures throughout Australia and New Zealand with several brands including a number of its own brands. Shriro has formed partnerships with a number of reknowned chefs including Neil Perry for a range of kitchen appliances and more recently UK celebrity chef Heston Blumenthal to create a worldwide Barbeque brand. Currently trading on a trailing P/E ratio of just 6.5x and paying a 7% fully franked dividend, Shriro is forecasting modest growth in 2016 as it invests in its BBQ launch, but expects stronger growth in 2017/18 with new product launches.

The post 3 stocks that pay you to own them appeared first on The Motley Fool Australia.

A share price under $5 bucks for a quality company paying huge sustainable dividends, that's what.

With dividend yields of 11.8%, 8.5% and 6.8% respectively, the following 3 shares could be a nice fit for the income portion of your portfolio. The bonus is that with share prices under $5.00, investors can also buy a reasonable amount of shares too, and these 3 companies also trade at cheap valuations. What more could an investor want?

Without further ado, here they are…

Countplus Limited (ASX: CUP) – price 68 cents

The financial services company offers financial planning, wealth advice, broking and accounting services to its customers, and also holds 5.4% of the shares in Class Limited (ASX: CL1) which now makes up ~24% of the value of the company. Countplus currently pays a fully franked dividend yield of 11.8% (4 quarterly payments of 2 cents each) at the current price and expects to match last year's net profit and earnings per share in FY2016. That puts Countplus on a P/E ratio of around 7.3x.

Tamawood Limited (ASX: TWD) – price $2.93

We've mentioned home designer and builder Tamawood several times over the past few years as a quality share paying decent dividend yields (averaging 9.7% over the past decade) and this year is no exception. The company has committed to paying a 25 cent fully franked dividend this financial year (FY16) – which, at the current price of $2.93, is a whopping dividend yield of 8.5%, and a P/E ratio of around 11.7x. For a more in-depth discussion of the company's operations, this article should help.

Contango Microcap Limited (ASX: CTN) – price 93 cents

With a share price of 93 cents, listed investment company Contango Microcap is trading at a big discount to the net tangible assets per share, which at the end of April stood at $1.14 before tax. That's the equivalent of buying a dollar worth of assets for just 81 cents. The Contango portfolio also contains 71 small to medium cap securities, giving investors instant wide diversification at discounted prices. The cherry on top is the company's trailing 6.8% partly-franked dividend yield with 3.7 cents expected to be paid as a final dividend in September/October 2016.

The post 3 dirt cheap dividend stocks to buy under $5 appeared first on The Motley Fool Australia.

By also seeking out companies with a strong return on equity (ROE) you are more likely to find those businesses which will continue to be able to pay strong dividends in the future. Return on equity is simply net profit divided by average shareholder equity.

Rising profits on the same amount of equity means rising ROE. Stable profits generated using higher equity means a falling ROE. Therefore a higher ROE is generally an indicator of a more efficient, more sustainable business.

The three stocks on this list are very different, but each have ROE that is well above average, and dividend payouts that are less in danger of being cut (for the purposes of this article, all ROE data is taken from Commsec as at 26 April 2016).

The retailer

JB Hi-Fi Limited (ASX: JBH) is a familiar stock and business to many, but few would suspect that the cheap and cheerful store fitout hides a market-beating ROE.

For the past three years, JB Hi-Fi has consistently achieved ROE of above 40%, which is a sector-leading result. A focus on inventory control, disciplined management of costs and a growing online offering all mean that profits grow without the need for huge additional funds.

With a move into home appliances as a "store in store" concept within its existing sites, JB should be able to capture additional retail spending without having to invest in a costly new phase of store rollouts. JB currently trades with a solid dividend yield of 4.4%, fully franked.

The fund manager

Hunter Hall International Ltd (ASX: HHL) is one of several fund managers listed on the ASX. While it is less high profile than some of its peers, its share price has actually jumped over 50% in the past year, while other fund managers have struggled.

Funds management is an attractive business model with high operating leverage, which means that each dollar of additional profit costs less to generate, as efficiencies of scale are reached.

Hunter Hall achieved ROE of between 22% and 55% in the financial years between 2010 and 2013. Its most recent year ROE was only 11%, however. If its ROE can return to its historical levels, the dividend yield of 7.6% should prove very enticing to income investors.

The home builder

Tamawood Limited (ASX: TWD) is a home building and construction company with a difference. Instead of buying land, and developing large-scale projects and selling them like a traditional developer, it takes a different approach.

Tamawood contracts directly with home builders, providing affordable homes under the Dixon Homes brand. Instead of large scale multi-dwelling projects, Tamawood delivers single homes, which protects it from the worst of the swings of the building cycle.

It also operates a franchise model across Australia, where it uses its scale to buy building materials and supply those materials to its franchisees. This model means that the franchisees pay far less than they would if they were buying materials in lower volumes as independent contractors.

The value of this capital light strategy shows up in the numbers, with ROE between 60% and 75% in the past three years, alongside a current dividend of over 8%.

The post 3 shares with high returns on equity and strong dividends to buy today appeared first on The Motley Fool Australia.

In fact, many SMSF portfolios virtually hold shares in the banks and cash as their only investments. And we've seen the share prices of the banks falling more than a third in the past year, which means big paper losses for those investors.

Australia and New Zealand Banking Group's (ASX: ANZ) share price has lost 36% over the past 12 months, or roughly $13.00. That is in no way is offset by dividends of $1.81, even after franking credits are added in.

Commonwealth Bank of Australia (ASX: CBA) has seen its share price lose more than 20% or more than $19 since March 2015. Dividends over the past year total $4.20.

National Australia Bank Ltd (ASX: NAB) and Westpac Banking Corp (ASX: WBC) have lost 32% and 23% respectively – although NAB has demerged its UK banking business into CYBG PLC CDI 1:1 (ASX: CYB), currently priced at $3.95.

The capital losses in the banks' share prices illustrate that investors should have a much more widely diversified portfolio. Research has shown that most investors should hold between 10 and 20 shares in their equity portion of their portfolio.

That's particularly important when the big four tend to see their share prices mostly move in sync.

Here are three options for investors looking for income and more diversity for their portfolio.

Tamawood Limited (ASX: TWD)

As recently as February, the home design and project management company confirmed that it would pay a 25 cent fully franked dividend in the 2016 financial year. At the current price of $3.11, that's a yield of 8% or 11.4% when franking is included. Investors should also know that the company has averaged yields of 9.7% over the past decade.

Dicker Data Ltd (ASX: DDR)

Dicker Data is one of Australia's largest distributors of computer hardware, software and related products and currently pays a trailing yield of 9%, fully franked. Dividends are paid quarterly, and the company expects to pay a total of 15.4 cents in the 2016 financial year – equating to a yield of 10.3%, or 14.7% grossed up for franking credits. Dicker Data is still led by founders, David Dicker and Fiona Brown, and both hold substantial stakes in the business.

Thorn Group Ltd (ASX: TGA)

A fully franked yield of 6.8% makes Thorn Group – the owner of Radio Rentals – our third pick. Thorn has diversified into consumer and commercial finance, and receivables management – and expects improved performances from these divisions in the second half of the 2016 financial year. Consumer Leasing (Radio Rentals) continues to be the primary growth driver and continues to hum along nicely.

Foolish takeaway

Diversity doesn't mean having to sell your shares in the big four banks, particularly after recent falls and if you have a long-term investment horizon. But it does mean allocating a smaller portion of your portfolio to the big four banks. Smaller companies also offer the potential for much more growth than the large banks, which struggle to generate double-digit growth given their dominance of their market.

The post 3 income shares for SMSF Investors appeared first on The Motley Fool Australia.