With the Australian dollar surging higher to above 78 U.S. cents, I believe the Reserve Bank will be very reluctant to discuss the possibility of raising rates any time soon.
In fact, if the dollar continues its ascent, I wouldn't be surprised if the central bank contemplates taking rates lower again in order to weaken the local currency.
Unfortunately this means that the paltry interest rates on offer from savings accounts and term deposits are likely to be here for some time.
So with the average dividend yield on the Australian share market approximately 4%, I would suggest investors skip savings accounts and consider investing in the share market instead.
Here are three dividend shares to consider:
Collins Foods Ltd (ASX: CKF)
Although the KFC operator only provides a trailing fully franked 3% dividend at present, I believe its expansion both at home and abroad will provide the company with the ability to grow its earnings and dividend significantly over the next few years. This could make it a great mix of growth and income in my opinion.
Suncorp Group Ltd (ASX: SUN)
The shares of this leading insurer currently provide a trailing fully franked 4.7% dividend. But thanks to its new One Suncorp strategy gaining traction, I expect the company's insurance trading ratio to continue to improve, allowing it to increase its dividend at a solid rate. This could make it an opportune time to invest.
Telstra Corporation Ltd (ASX: TLS)
Whilst opinion is divided on the sustainability of the telco giant's dividend, I'm optimistic that its market-leading position and cost-cutting program will allow it to maintain its current pay out for at least the next couple of years. If it is able to, then investors buying shares today would receive a massive fully franked 7.3% dividend over the next 12 months.
