2 dividend shares I want to buy

These 2 dividend shares are high on my watchlist.

| 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

The interest rates offered by bank accounts and term deposits is truly terrible.

The fact that $1 million can't even earn $30,000 annual interest today is a sign of how much governments and institutions aren't thinking about savers.

The only option might be for those investors to look to higher-yielding dividend shares.

Here are two dividend stocks at the top of my watchlist:

WAM Capital Limited (ASX: WAM)

WAM Capital is one of the largest listed investment companies on the ASX.

Its approach is to try to generate a market-beating performance and then pay most of that return as a dividend to shareholders.

The WAM Capital's investment team's ability to find undervalued growth companies consistently just shows their technique works.

Over the past five years the portfolio has returned an average of 17.6% per annum (before fees and expenses), soundly beating the S&P/ASX All Ordinaries Accumulation Index's average return of 10.7%.

WAM Capital is trading with a trailing grossed-up dividend yield of 8.93%.

Rural Funds Group (ASX: RFF)

Rural Funds is the only REIT on the ASX that purely invests in agricultural property.

It has a diverse range of farms including poultry, cattle, vineyards, almonds, macadamias and cotton.

I like the idea of Rural Funds because farmland has been a useful asset for hundreds of years and should continue to be for many years to come.

Rural Funds has rent indexation increases built into all of its contracts in some form, which is why Rural Funds can grow the distribution each year and accurately forecast an increase each year. Management are increasing the distribution in FY18 by 4%.

It's currently trading with a distribution yield of 4.28%.

Foolish takeaway

Good income shares are hard to find at a good price, with both of the above trading at almost all-time highs.

I want to add more Rural Funds and WAM Capital shares to my portfolio, but I'd wait for a cheaper price or premium to the underlying asset before buying,

Motley Fool contributor Tristan Harrison owns shares of RURALFUNDS STAPLED and WAM Capital Limited. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. 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 »