With interest rates at record low levels and looking as though they could yet drop lower, income investors have been piling into popular dividend shares such as Sydney Airport Holdings Ltd (ASX: SYD) and Transurban Group (ASX: TCL).

Unfortunately this has driven up their respective share prices and reduced their yields. For this reason I don’t think they are the best option for income investors at this point in time.

Thankfully there are a number of great options for investors. Three shares which I think are both cheap and provide great dividends are listed below:

Fantastic Holdings Limited (ASX: FAN)

It has been a disappointing year for this furniture retailer due to its struggling Le Cornu brand. The Adelaide store’s ongoing poor performance led management to close the store and write down its assets. This ultimately led to the company reporting a 13% drop in net profit in FY 2016. But with the store now closed I expect a much stronger FY 2017. With its shares down almost 20% in the last 30 days, it is looking very cheap at just over 11x earnings in my opinion. Its shares are expected to provide a fully franked 6.4% dividend next year according to CommSec, which I believe makes it a great option for income investors.

G8 Education Ltd (ASX: GEM)

G8 Education is another company which was punished during earnings season. Although the childcare operator produced a reasonably disappointing half year result, I was very surprised to see its shares drop as much as they have. G8 Education’s shares have now plunged an incredible 22% since the half year release. But with management expecting a big improvement in the company’s performance in the second half of the year, I feel now could be a great time to make an investment. Especially with its shares forecast to provide investors with a fully franked 10% dividend in FY 2017.

Village Roadshow Ltd (ASX: VRL)

Australia’s leading operator of theme parks has been the worst performer of the three. Year to date its shares are down a staggering 32%. But management is addressing this and is busy working on a turnaround strategy that involves taking steps to rebase earnings and chase new revenue streams. In light of this and the strong inbound tourism Australia is experiencing, I feel optimistic that it will deliver on its turnaround plans. So with its shares changing hands at 14x estimated FY 2017 earnings and expected to provide a fully franked 5.6% dividend next year, now might be a great time to invest in the company.

If you're still looking for even more ideas then take a look at these rapidly growing shares as well. They each pay fully franked dividends which have been growing at a strong rate.

Why These 3 Blue Chip Shares Are Set to Soar in 2016

Discover The Motley Fool's Top 3 blue chips for 2016. These 3 'new breed' shares pay fully franked dividends AND offer the prospect of significant capital appreciation. Simply click here to gain access to this comprehensive FREE investment report.

No credit card required!

HOT OFF THE PRESSES: Motley Fool’s #1 Dividend Pick for 2017!

With its shares up 155% in just the last five years, this ‘under the radar’ consumer favourite is both a hot growth stock AND our expert’s #1 dividend pick for 2017. Now we’re pulling back the curtain for you... And all you have to do to discover the name, code and a full analysis is enter your email below!

Simply enter your email now to receive your copy of our brand-new FREE report, “The Motley Fool’s Top Dividend Stock for 2017.”

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our https://www.fool.com.au/financial-services-guide">Financial Services Guide (FSG) for more information.

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.