With interest rates expected to stay at historically low levels for the majority of 2017, there is a good chance that dividend shares will continue to be a popular choice amongst investors looking for a decent income stream.
As we have seen during the course of 2016 not all dividend shares are equal. In fact, some of the most 'defensive' income shares have taken a pretty big beating recently:
Unfortunately, there is a good chance that many of these interest rate sensitive, or 'bond-proxy', shares will continue to underperform in 2017 if US interest rates continue to climb higher.
Luckily, there are a number of attractive dividend-paying shares on the ASX that are less sensitive to the gyrations of the bond market and look like pretty good bets for 2017.
I have highlighted eight of my favourites below:
Retail Food Group Limited (ASX: RFG) – Retail Food Group is a Fool favourite and for good reason. The company is expected to provide a fully franked dividend yield of around 4.7% over the next 12 months and, at the same time, grow its underlying earnings at around 20%. Not bad for a company trading on a price-to-earnings (P/E) ratio of just 15.
Mantra Group Ltd (ASX: MTR) – Mantra trades on a forecast dividend yield of 4.5% and also provides investors with direct exposure to Australia's tourism boom.
Greencross Limited (ASX: GXL) – Greencross is in the process of implementing a clever strategy of co-locating veterinary clinics inside its retail stores. This is expected to drive sales growth over the coming years and support a growing dividend which is now yielding around 3%.
InvoCare Limited (ASX: IVC) – InvoCare's expansion into the US has hit some speed-bumps recently, but its consistent performance in Australia means the funeral operator is still a good choice for nervous investors. The shares currently offer a forecast fully franked yield of 3.3%
APN Outdoor Group Ltd (ASX: APO) – It has been a volatile year for APN Outdoor shareholders but the shares have been moving back in the right direction over the past month or so. The out-of-home advertising sector remains attractive and the shares currently offer a yield of 3.2%.
Lifehealthcare Group Ltd (ASX: LHC) – Lifehealthcare is a small-cap healthcare company that provides surgical equipment across Australia and New Zealand. The shares offers a dividend yield of 5.2% and trade on an undemanding P/E ratio of just 12.
Challenger Ltd (ASX: CGF) – The annuity provider has been a top performing share over the past couple of years and there is little to suggest this trend will end anytime soon. The ageing population is a real tailwind for Challenger and this should support a growing dividend which is currently yielding around 3.2%.
WAM Capital Limited (ASX: WAM) – The listed investment company has an excellent track record of outperforming the market and, at the same time, is far less volatile. The shares are a good choice for risk averse investors and offer an attractive trailing dividend yield of 6.1%.
