Unless you’ve got a home loan, getting a relatively ‘risk free’ return over 3% is exceptionally hard these days.
This has been the reason why many ASX-listed real estate investment trusts rose strongly in 2015, however the experts are saying they’ve run too hard, so where do we look now?
- The banks are looking vulnerable to technological disruption, so capital losses in the future are a worry
- Small caps also had a good run and the ones with sustainable income streams were discovered pretty early this year
- Many great medical companies like CSL Limited (ASX: CSL) and Ramsay Health Care Limited (ASX: RHC) pay a measly 1.6% yield
- The Telstra Corporation Ltd (ASX: TLS) share price has returned to ‘reasonable’ levels, however there are many challenges the company has to deal with in 2016.
4 big shares with sustainable dividends over 4%
Instead, investors should look for companies that are a little underappreciated by the market and are expected to grow earnings next year.
QBE Insurance Group Ltd (ASX: QBE) is on-track to be a star performer in early 2016 when it reports its full-year results in February. Analysts are expecting a dividend yield in excess of 4.1% fully franked for the next 12 months.
Consumer finance company FlexiGroup Limited (ASX: FXL) has a few challenges ahead but with an improving economy it should grow earnings nicely over the next 12 months. It’s expected to yield over 6.1% next year!
A lower Australian dollar should be a major driver for an increase in in-bound tourism. One company set to benefit is Sydney Airport Holdings Ltd (ASX: SYD), and it’s also predicted to yield over 4.1% in 2016.
Finally, sharemarket operator and compliance company ASX Ltd (ASX: ASX) has successfully weathered some decent competition of late but remains well off its 12-month high. Earnings and dividends per share are predicted to increase in 2016, with a yield of 4.6% predicted by the experts.
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Motley Fool contributor Andrew Mudie owns shares of FlexiGroup Limited and QBE Insurance Group Ltd. You can find Andrew on Twitter @andrewmudie.
Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.