The Reserve Bank of Australia (RBA) decided to leave interest rates on hold again on Tuesday, and with rates expected to stay at that level for the foreseeable future, investors are condemned to mediocre income from their investments.
Or are they? Here are 3 dividend-paying shares to beat the cash crunch:
Flight Centre Travel Group Ltd (ASX: FLT) – yields 4.7% fully franked
This travel agent operates a variety of corporate and retail travel businesses, including managed tours, both in Australia and overseas. While earnings and dividends have been lumpy in the past, the business is consistently profitable, has experienced management and the travel market is growing. Flight Centre carries minimal debt and has a huge reserve of cash, ensuring financial stability, and a 4.7% dividend plus franking credits is almost double that on offer in term deposits.
Blackmores Limited (ASX: BKL) – yields 3.1% fully franked
Although Blackmores' dividend is small, the company has some promising growth opportunities in China, and the prospect for growing earnings and dividends faster than any term deposit. Like with Flight Centre above, Blackmores has minimal debt and a strong net cash position, although the relatively limited number of shares on issue can sometimes cause volatile price swings. Even so, at today's prices I'd own Blackmores shares ahead of a term deposit.
Insurance Australia Group Ltd (ASX: IAG) – yields 4.4% fully franked
One of Australia's largest home and automobile insurers, Insurance Australia Group has a strong, recurring business and a balance sheet packed with investment assets. I'm not very excited about the company's business per se, as I don't think it will grow fast, but the market demand for insurance is consistent, and dividends should be both reliable and remain well above the interest available on a term deposit. Franking credits are a nice bonus for those that can benefit from them.
