The average portfolio of an investor looking for income will likely consist of Telstra Corporation Ltd (ASX: TLS), Wesfarmers Ltd (ASX: WES), Commonwealth Bank of Australia (ASX: CBA) and perhaps the other big four banks as well.
The problem with this strategy is that there's very little diversification and not much growth on offer either.
If you still want exposure to all the big blue chips but with a lot more diversification and a bit of growth, then listed investment companies (LICs) could be what you're after.
Some of the oldest and most reliable LICs own the same large blue chips that I mentioned above.
Whitefield Limited (ASX: WHF), Australian Foundation Investment Co. Ltd. (ASX: AFI) (AFIC), Milton Corporation Limited (ASX: MLT), Argo Investments Limited (ASX: ARG) and Australian United Investment Company Ltd (ASX: AUI) are all options in the large cap space. These LICs all have grossed-up dividend yields of around 6%, which makes them all good options.
There are also other LICs that focus on smaller companies that also generate good dividend income for investors. Grossed-up yields are above 7% with LICs like Clime Capital Limited (ASX: CAM), WAM Capital Limited (ASX: WAM), WAM Research Limited (ASX: WAX) and Hunter Hall Global Value Ltd (ASX: HHV).
All of these LICs have portfolios with at least twenty holdings, which makes them just as safe if not safer than the individual blue chips.
Foolish takeaway
If you're not going to go for growth shares then I think investing in LICs is the next best thing. Cheap costs, good returns and good income is a combination which is hard to beat.