Unless you've got a home loan, getting a relatively 'risk free' return over 3% is exceptionally hard these days.
This has been the reason why many ASX-listed real estate investment trusts rose strongly in 2015, however the experts are saying they've run too hard, so where do we look now?
Our options:
- The banks are looking vulnerable to technological disruption, so capital losses in the future are a worry
- Small caps also had a good run and the ones with sustainable income streams were discovered pretty early this year
- Many great medical companies like CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC) pay a measly 1.6% yield
- The Telstra Corporation Ltd (ASX: TLS) share price has returned to 'reasonable' levels, however there are many challenges the company has to deal with in 2016.
4 big shares with sustainable dividends over 4%
Instead, investors should look for companies that are a little underappreciated by the market and are expected to grow earnings next year.
QBE Insurance Group Ltd (ASX: QBE) is on-track to be a star performer in early 2016 when it reports its full-year results in February. Analysts are expecting a dividend yield in excess of 4.1% fully franked for the next 12 months.
Consumer finance company FlexiGroup Limited (ASX: FXL) has a few challenges ahead but with an improving economy it should grow earnings nicely over the next 12 months. It's expected to yield over 6.1% next year!
A lower Australian dollar should be a major driver for an increase in in-bound tourism. One company set to benefit is Sydney Airport Holdings Ltd (ASX: SYD), and it's also predicted to yield over 4.1% in 2016.
Finally, sharemarket operator and compliance company ASX Ltd (ASX: ASX) has successfully weathered some decent competition of late but remains well off its 12-month high. Earnings and dividends per share are predicted to increase in 2016, with a yield of 4.6% predicted by the experts.
