With interest rates at record lows and traditional yield plays such as Sydney Airport Holdings Ltd (ASX: SYD) and Transurban Group (ASX: TCL) paying below average dividends, should investors look at Perpetual Limited (ASX: PPT) today?

The Australian equities fund manager’s shares are forecast to provide a fully franked 5.4% dividend in FY 2017. This is 110 basis points higher than the market average and no doubt a tempting option for investors in search of income.

Personally, I would avoid Perpetual no matter how tempting it may appear due to a disappointing performance in the last financial year.

Perpetual’s average funds under management (FUM) dropped 7% in FY 2016 from $32.3 billion to $30 billion. As you might expect this drop led to Perpetual’s FUM fees dropping 6.7% to $213.7 million. As a result profit before tax dropped as well, this time by 6% to $118.1 million.

Whilst there could be countless reasons for its fund outflows, I wouldn’t be surprised if some of its questionable investments are largely to blame.

In recent days it has been increasing its position in Myer Holdings Ltd (ASX: MYR), Nine Entertainment Co Holdings Ltd (ASX: NEC), and Clydesdale and Yorkshire Bank  (CYBG PLC CDI 1:1 (ASX: CYB)). Three businesses I would stay well clear of.

Another reason I am quite bearish on the fund manager is the performance of its Global Share Fund. Perpetual is targeting $1 billion in FUM by August 2017 for this fund, but with it delivering a negative 4.5% return in the last 12 months it’s hardly going to inspire confidence in investors.

If the shares were dirt cheap then I might be able to look beyond some of this. But at 17x estimated FY 2017 earnings its shares are more expensive than both Platinum Asset Management Limited (ASX: PTM) and IOOF Holdings Limited (ASX: IFL). Because of this I would give Perpetual a wide berth and focus on other areas of the market.

Instead of Perpetual I would suggest investors in search of income take a look at these ASX shares. Each has been growing its fully franked dividend at a strong rate, making them great investment ideas in my opinion.

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Motley Fool contributor James Mickleboro has no position in any stocks mentioned. 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.