Australian investors are fortunate with the way our dividend system is constructed. Not only do companies tend to pay higher dividends than they do in the US, but we also get tax benefits in the form of franking credits – which can have additional benefits for retirees.
Here are five shares that I consider a suitable purchase for a self-managed super fund (SMSF) investor today:
Vocus Group Ltd (ASX: VOC) – yields 3.3% fully franked
This telecom company has seen its share price battered recently as investors come to terms with lower growth. Yet over the long term, tailwinds for connectivity demand are strong and Vocus continues to invest heavily in its networks. As cost savings are extracted and capital expenditure slows, Vocus should be able to deliver both higher dividends and incremental earnings growth over the long term.
Retail Food Group Limited (ASX: RFG) – yields 5.1% fully franked
Franchise owner Retail Food Group has attractive economics, and a long-term track record of growing revenues and earnings per share. A decision to vertically integrate – buying the coffee roasting and bakery businesses that supply its franchises – offers some other potential business opportunities in addition to new franchise openings. Although growth appears to be slowing, the company does not appear expensive today.
G8 Education Ltd (ASX: GEM) – yields 5.9% fully franked
G8 Education shares have risen strongly in recent times as investors have grasped that the company is able to keep costs in check and maintain the attractive quarterly dividend. However, G8 continues to expand strongly at a time when some metrics like occupancy are suggesting weakness in existing businesses. This coincides with prices at close to a two-year high, and while I do think the company is worth owning, I'd prefer to get G8 shares closer to $3 to factor in more of a margin of safety.
Wesfarmers Ltd (ASX: WES) – yields 4.7% fully franked
A reliable business that appears priced around its historical average, Wesfarmers has been a steady grower for investors over the past decade. While some developments such as a possible divestment of the coal business and of Officeworks could bring change to the conglomerate's structure, conservative management with a long-term mindset should continue to deliver rewards to shareholders.
BETANASDAQ ETF UNITS (ASX: NDQ)
An Australian-listed Exchange Traded Fund (ETF) that tracks the top 100 companies on the US NASDAQ, including Google, Apple, and Facebook – NDQ is a virtual who's who of US blue chips. It doesn't pay much in the way of dividends, yielding about 0.6% over the past 12 months. However, the quality of most of the index makes it well worth holding for the long term, in my opinion.
