Forget Commonwealth Bank of Australia and buy these 3 dividend shares instead

Commonwealth Bank of Australia (ASX:CBA) is a great dividend payer, but are these 3 ASX shares even better?

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

There is no getting away from the fact that Commonwealth Bank of Australia (ASX: CBA) is one of the most popular bank shares on the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO).

Australia's largest bank is one of the first shares that investors will turn to when they are in search of income. Rightly so, as in FY 2017 the bank is expected to pay an estimated fully franked 5.8% dividend.

This is a great dividend and well above the 4.4% market-average, but it's not the best dividend out there. According to CommSec, these three shares are expected to pay even greater dividends in FY 2017.

Fantastic Holdings Limited (ASX: FAN)

Fantastic Holdings is the owner and operator of furniture retail brands Fantastic Furniture, Le Cornu, and Dare Gallery. Thanks to a strong housing market the company posted phenomenal comparable store sales growth of 15.7% in the first half of its fiscal year. Despite its strong growth the shares are still only changing hands at 11.5x estimated full year earnings. I believe this makes them a great investment today, especially with the shares providing an estimated 6.6% dividend in FY 2017. A housing market downturn could of course negatively impact the company, but whist it remains strong Fantastic Holdings is a buy for me.

FlexiGroup Limited (ASX: FXL)

The share price of this leading finance and leasing company has plummeted over 26% in the last 30 days, meaning its shares will now provide an estimated fully franked 8.3% dividend in FY 2017. The decline in its share price came following a warning of systems and goodwill impairments that meant its statutory profit after tax is expected to drop by around 35% to $54.2 million. Next year looks likely to be a year of transition, but management expects the company to return to double-digit cash profit growth from FY 2018 onwards. I feel confident management will turn around the fortunes of the company, but it is worth considering the consequences of it failing to do so before making an investment.

G8 Education Ltd (ASX: GEM)

Childcare operator G8 Education has grown its dividend for six consecutive years and I don't see that stopping any time soon. Thanks to the company's growth through acquisition strategy, I believe there is still a great deal more growth ahead. Currently G8 Education owns 471 centres in Australia and 18 centres in Singapore, with management estimating there to be an addressable market of up to 4,000 centres. The shares are estimated to provide a fully franked 7.6% dividend in FY 2017, making G8 Education a must buy for income investors in my opinion.

Motley Fool contributor James Mickleboro 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.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »