This era of low interest rates makes finding good income very difficult.
The Australian share market is a great way to generate that income. Dividends and distributions are much more reliable than share price movements, which is why I think income shouldn't be underestimated. Throw in the franking credits and there are some great options out there.
Here are four I'd consider:
WAM Capital Limited (ASX: WAM)
WAM Capital is one of the largest listed investment companies on the ASX. Its sole purpose is to invest in undervalued growth companies for shareholders. It then pays out a lot of the profit as a growing dividend.
The investment team have a strong track record and there's a good chance the outperformance will continue. WAM Capital is trading with a fully franked dividend yield of 6.08%.
Medibank Private Ltd (ASX: MPL)
Medibank is the biggest private health insurer in Australia. Management are implementing a number of strategies to reduce costs and increase revenue.
It's hard to say what will happen in the short-term with the private health insurance industry but it should be a growth sector in the long-term thanks to the ageing demographics and rising population.
Medibank has a fully franked dividend yield of 3.93%.
Rural Funds Group (ASX: RFF)
Rural Funds is one of the fastest growing real estate investment trusts on the ASX. It purely invests in agricultural property and has a good mix of farm types including almonds, macadamias, vineyards, cattle, poultry and cotton.
The diversified property portfolio and growing income makes Rural Funds a good income choice in my opinion. It currently has a distribution yield of 4.62%.
Telstra Corporation Ltd (ASX: TLS)
This is a bit of a left field choice considering all of the negativity surrounding the business and my own scepticism of Telstra.
However, Telstra's share price reduction makes it more attractive and increases the potential dividend yield. It's important to be aware that management are decreasing the dividend and the payout ratio, but I think is a good forward-thinking decision.
Management are acknowledging the problems and are going to focus on turning Telstra into a technology stock, which should be good for long-term growth.
Based on the new annual dividend guidance of 22 cents per share, it's trading on a forward fully franked yield of 5.99%.
Foolish takeaway
I think WAM Capital and Rural Funds are great long-term choices for income.
Telstra could actually be a good choice at the current price as long as management can start sustainably growing earnings per share in a few years time.
