I think the big four banks, and Australia and New Zealand Banking Group (ASX: ANZ) shares in particular, are trading at attractive prices right now for income investors.
However, not everyone is comfortable buying the banks following the Royal Commission and the housing market downturn.
In light of this, I've picked out three dividend shares that I think would be great alternatives to ANZ.
Adairs Ltd (ASX: ADH)
I think that now could be a great time to buy this home furnishings retailer's shares. This is because the recent election result and APRA's plan to reduce the mortgage serviceability threshold look set to be big positives for the housing market. I suspect that this could be a boost to Adairs' sales, which were already growing at a solid rate despite the housing market downturn. At present, the company's shares are trading at 11x earnings and offer investors a trailing fully franked 7% dividend yield.
Coles Group Ltd (ASX: COL)
I think this supermarket giant would be a good alternative to the banks. I like Coles due to its defensive qualities, dividend policy and focus on automation. The latter is expected to give its margins a significant boost in the coming years and should underpin solid profit and dividend growth. As the company intends to pay out between 80% and 90% of its earnings as dividends, I estimate that its shares currently provide a forward fully franked 4.4% dividend yield.
Dicker Data Ltd (ASX: DDR)
Another top alternative to the banks could be Dicker Data. It is a leading distributor of information technology products across the Australian and New Zealand region. Thanks to increasing demand and the benefits of new vendor agreements, Dicker Data has been outperforming expectations in recent years. This has continued in FY19 with the company reporting further strong sales and profit growth during the first quarter of FY19. This year, the company intends to pay a dividend of 22 cents per share, which currently equates to a fully franked 4.4% dividend yield.
