With the S&P/ASX 200 Index (ASX: XJO) (INDEX: ^AXJO) up 37% and the Dow Jones Industrial Average, Japan's Nikkei and the UK's FTSE up 95%, 63% and 53% respectively, it's growing increasingly difficult for investors to find undervalued stocks. And with interest rates low (and possibly going lower) it's no wonder so many Australians are shrugging their shoulders and hitting the 'Buy' button on overvalued big bank stocks.
But it wasn't as though we couldn't see the bull market coming. With interest rates low, stocks such as Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) were always going to notch up strong gains. But that doesn't make them a good long-term investment!
Especially when there's ASX growth stocks yielding 7% grossed-up which should be considered before the major banks.
Although I could go on all day about how overvalued some ASX blue-chip stocks really are, the problem right now for investors is obvious. You need a safe place to park your investment dollars where you will also be rewarded handsomely. Now, no competent advisor will guarantee a return nor assure you your money is safe as houses. But by adopting a long-term investment strategy many have proven how buying and holding stocks can be extremely rewarding, provided you buy the right companies at the right price.
Two blue-chip dividend stocks which currently appear to be well priced and provide a solid income stream are Coca-Cola Amatil Ltd (ASX: CCL) and BHP Billiton Limited (ASX: BHP). At the smaller end of town Sky Network Television Limited (ASX: SKT) and Village Roadshow Limited (ASX: VRL) are two stocks yield-hungry investors should consider.
The BEST income stock idea we've got
Searching for dividend yield is an endless pursuit but it's vital you analyse the underlying business thoroughly before making any investment decision. For example, I believe Westpac shares will struggle to beat the market from today's prices and any gain realised from its fully franked dividend could be quickly wiped out if the market starts to take profits.
