BHP Billiton Limited
In years gone by, a major reason to buy shares in a mining company such as BHP Billiton Limited (ASX: BHP) was unlikely to be its dividend potential. Certainly, a growing Chinese economy and a bright long term future for the emerging world was a major pull for investors in BHP, but over the last 10 years the company has also been increasing dividends at a brisk pace, too.
In fact, they have risen on a per share basis at an annualised rate of 15% during the period, and when coupled with BHP's share price fall in recent months (it is down 22% in the last year) it means that the diversified mining play now yields a whopping 4.9%. That's more than the ASX (at 4.6%) and marks BHP out as a top notch income play.
Income stocks could gain a lift from yield-hungry investors, with interest rates set to fall this year. As a result, now could be a great time to buy a slice of BHP.
Telstra Corporation Ltd
Even though dividends per share have fallen at an annualised rate of 3.3% over the last 10 years, Telstra Corporation Ltd (ASX: TLS) remains a steadfast income stock. That's at least partly because it currently yields a very appealing 4.6% despite that fall in dividends, but also because it is a very enticing defensive play that should offer income investors a degree of stability moving forward.
This is perhaps best evidenced by a beta of just 0.5 and this means that (in theory) shares in Telstra should move by 0.5% for every 1% movement in the wider index. So, with the outlook for the ASX looking decidedly uncertain at the present time, defensive stocks such as Telstra could see their share prices move higher.
Transurban Group
Despite having a price to earnings (P/E) ratio of 45.8, Transurban Group (ASX: TCL) remains a hugely appealing investment at the present time. Of course, many value investors will be put off by the fact that the company's P/E ratio is three times that of the ASX (which has a P/E ratio of 15.1), but investors in Transurban are essentially buying into a very solid company with an excellent track record of earnings growth.
For example, over the last 10 years Transurban has been able to grow its bottom line at an annualised rate of 19.1%. That's a stunning rate of growth when you consider that the period has included the global financial crisis, which highlights that Transurban could deliver strong growth come economic rain or shine.
It seems investors are willing to pay up for relative certainty while the future for the ASX is somewhat challenging. As a result, Transurban could be worth buying at the present time.
