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Forget Australia and New Zealand Banking Group and buy these dividend shares

At their current share prices I think that Australia and New Zealand Banking Group (ASX: ANZ) and the rest of the big four banks are about fair value now.

As I prefer to buy the banks when they are cheap, at this point I would rather buy alternative dividend shares which I believe have the potential to provide share price gains as well as a generous yield.

Three dividend shares which I think fit the bill are listed below:

Fortescue Metals Group Limited (ASX: FMG)

A controversial pick to start with, but a quality option nonetheless. With its shares changing hands at just 8x estimated forward earnings and providing a trailing fully franked 8.5% dividend, I think Fortescue is well worth considering today. Especially given its plan to start mining higher grade iron ore. Due to pollution concerns Chinese steelmakers have moved away from the low grade ore that Fortescue mines, leaving it trading at a major discount to the benchmark 62% fines. By producing higher grade ore I think Fortescue will be in a position to deliver another strong result in FY 2018.

Lifehealthcare Group Ltd (ASX: LHC)

This distributor of high-end medical devices in Australia and New Zealand expects to achieve full-year revenue and earnings growth in the high single to low double digits in FY 2018. Despite this solid growth outlook its shares are still priced at under 14x estimated forward earnings. I suspect that if the company delivers on expectations, its shares could rerate higher. I think this could make it a great time to snap them up, especially considering they currently provide a trailing partially franked 5.2% dividend.

Super Retail Group Ltd (ASX: SUL)

Super Retail Group is the company behind the BCF, Rays, Super Cheap Auto, and Rebel Sport brands. Due to a sell-off back in March of last year its shares are still trading at a lowly 12x estimated forward earnings. This is significantly lower than average for its shares and a buying opportunity for both value and income investors in my opinion. At the current share price Super Retail’s shares provide a trailing fully franked 5.1% dividend.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Super Retail Group Limited. 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.