by Simon Bond

With the bank cash at call rate sitting at 2.5% and the 10 Year Bond rate at just over 4% the hunt for sustainable income returns has intensified.



One of the best ways to enhance the yields available on quality shares is to Buy companies that pay fully franked dividends just before they go what is known as “ex dividend”. This means that you the investor are entitled to the upcoming dividend payment.

This increases the income yield as a percentage significantly if you stay invested for at least 13 months, in many cases the stock price will “hold” it’s dividend in a market that is rising at the time.

By way of example there are many quality companies that have recently reported their profits that have dividend payments coming up.

Take Blackmores Ltd (vitamins and healthcare products) for instance.

They went ex dividend on March the 5th, the amount was 44 cents fully franked for the half year period.
 So, the share price before they went ex was $25.10, as the market was up on the day the stock held it’s price so in effect the dividend was “free”.

The numbers.

Share price $25.10. Dividend due 44 cents, dividend due in September 83 cents, dividend due in March 2015, expected 44 cents or more.

Income received over 13 months $1.71, current share price $25.10. Yield for 13 months 6.81%, which grosses up to 9.73% if the investor is able to take full advantage of the franking credits.

Surely a better option than 2.5% in the bank, that is, if the investor is prepared to risk the potential for a decline in capital from market risk.

There are many others to consider, depending on your appetite for risk.