I think it's a travesty that interest rates have gone so low. It has punished savers who like to keep cash in the bank, whilst encouraging speculative borrowing and a huge run up in debt. Household debt could be what tips Australia into a recession.
Savers may want to look at investing in dividend shares to boost their income, it could provide good dividends whilst also generating long-term capital growth.
Here are three dividend shares I'd buy:
Rural Funds Group (ASX: RFF)
Rural Funds Group is the best real estate investment trust (REIT) on the ASX in my opinion. Currently, it is the only REIT to offer investors exposure to owning agricultural property, whilst not having the operational risks that come with running a farm such as a drought in a particular year.
I really like Rural Funds because it has a diverse portfolio of farm types including cattle, almonds, macadamias, cotton, vineyards and poultry. These farms are all leased to high-quality tenants, quite a few of them are listed in Australia or abroad such as Treasury Wine Estates Ltd (ASX: TWE).
Rural Funds could be a great dividend share because it has rental indexation built into all of its rental agreements, which essentially guarantees a rental increase of 2.5% or CPI. This means the income should keep growing, even if the value of the farmland goes down.
Rural Funds is currently trading with a trailing distribution yield of 4.64%.
NAOS Absolute Opportunities Co Ltd (ASX: NAC)
This is one of the listed investment companies (LICs) run by the Naos investment team.
Aside from the low benchmark for performance fees, I think it's an attractive LIC because it has generated strong medium-term returns and has a good dividend yield. Over the last three years its portfolio has generated an average return of 20.54% per annum.
According to its December 2017 monthly update it was trading at a discount of over 6% to the post-tax NTA and it currently has a grossed-up dividend yield of 6.84%.
Japara Healthcare Ltd (ASX: JHC)
Japara is one of the largest aged care providers in Australia. It's expected that many more aged care beds will be needed in the long-term because of Australia's ageing population. It's likely that a big portion of the elderly will need to be looked after in an aged care centre once they reach 80.
I think Japara could generate good long-term returns as it steadily grows the number of residents that are staying at one of its facilities over the years.
Japara is currently trading with a trailing dividend yield of 8.08%.
Foolish takeaway
I'd be inclined to choose Rural Funds as my dividend pick of the three because of how much the share price has dropped recently, I think it's a quality dividend stock and should be able to increase its distributions for a long time to come.
