Income, income, income!

Finding more of it has been high on the agenda of every Australian heading towards retirement over the last few years.

Investors have chased the solid dividends on offer from the likes of Australia and New Zealand Banking Group (ASX: ANZ), Telstra Corporation Ltd (ASX: TLS)Woolworths Limited (ASX: WOW) and Woodside Petroleum Limited (ASX: WPL). However holder of these companies have seen their capital erode over the last six months as the Australian market declined by 2.5% and investors continued to question the reliability of the yields on offer from these income favourites.

Dividend GROWTH is important

We’re now seeing analysts pull back their dividend expectations to the point where many of these staple holdings could continue to reduce their dividend payouts over the next five years. Woolworths and Australia and New Zealand Banking Group have been the first to move to lower dividends, Woodside having the most dramatic effect, slashing its final dividend from 184 cents per share to just 59 cents.

This is bad for share prices and bad for investors that rely on income to fund their lifestyles in retirement.

Have you overlooked this blue-chip dividend machine?

One company that I believe investors are overlooking has also underperformed the ASX200 this year, however, it hasn’t been due to operational performance or for slashing its dividend. In fact, it’s been the absence of news that has analysts wondering if the company will deliver on its full-year financial predictions.

This blue-chip company, with a market cap of $17 billion, has operations in 43 countries and policyholders of its insurance products in in more than 140 countries. It is, of course, Australia’s largest listed insurer: QBE Insurance Group Ltd (ASX: QBE).

Without any concrete (or even solid) reasons to believe that QBE is underperforming its own expectations, investors should start getting excited about QBE’s dividend growth forecasts.

QBE trades on a trailing yield of 4.3% fully franked, however the average of 14 analysts that cover the company points to the dividend yield increasing by 15% this year and 26% over the next two years. This corresponds to a 6% fully franked yield by the end of 2018!

The real question

Investors need to ask themselves; do I hold onto Telstra shares yielding 5.8% at current prices, with little chance of capital growth, or do I take the riskier approach of investing in QBE’s shares that have significant upside from current prices?

If you are interested in quality dividend shares, then I would recommend investigating this top dividend share too. A strong yield and potential share price gains make this a great investment idea in my opinion.

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Motley Fool contributor Andrew Mudie owns shares of QBE Insurance Group Ltd. You can find Andrew on Twitter @andrewmudie

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.