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3 attractive dividend shares (that aren’t Telstra Corporation Ltd) to beat the 1.75% interest rate

Credit: GotCredit

At the beginning of May, the Board of the Reserve Bank of Australia (RBA) decided to drop the official cash rate to the unprecedented level of just 1.75%.

Unfortunately for many self-funded retirees who hold their savings in a deposit account, their income most likely just got squeezed that little bit more.

For investors who are seeking out higher returns and income from the share market, thankfully there are still a number of attractive opportunities available that will provide yields far above the RBA’s official cash rate.

While Telstra Corporation Ltd (ASX: TLS) rightly remains a perennial favourite amongst income-seeking investors and offers a benchmark trailing fully franked dividend yield of 5.3%, there are other dividend-paying stocks which are also attractive.

Here are three shares to consider…

Argo Investments Limited (ASX: ARG) – one of the oldest and largest listed investment companies (LICs) on the ASX, Argo offers investors exposure to a blue-chip portfolio which provides diversity and a trailing fully franked dividend yield of 4.1%.

Commonwealth Bank of Australia (ASX: CBA) – banks remain incredibly profitable even if they are set to become slightly less profitable as they enter a tighter stage of the cycle. Commonwealth Bank is arguably the bank with the strongest balance sheet and with a trailing dividend yield of 5.3% it could arguably be the safest choice for bank exposure.

Tatts Group Limited (ASX: TTS) – as the operator of major lotteries across Australia, Tatts Group’s operations enjoy a regulated niche position with reliable “infrastructure-like” earnings dependability. The stock is trading on a trailing fully franked yield of 4.2%.

Foolish takeaway

As an investor, if you’re hunting for juicy dividend yield opportunities it’s important to remember that yield should never be considered in isolation, but rather yield should be assessed in conjunction with the overall valuation you have for a particular stock.

Remember, it only takes a small decline in the price of a share to completely wipe out the gains from dividends that you may receive.

In other words, think about the overall return you expect to receive from a stock, not just the yield component.

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Returns As of 6th October 2020

Motley Fool contributor Tim McArthur 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.

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