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2 high-yield alternatives to the ANZ Bank dividend

Due to their recent decline, I think Australia and New Zealand Banking Group (ASX: ANZ) shares are a great option for income investors that don’t already have exposure to the banks.

After all, at the current price its shares offer investors a trailing fully franked 6% yield.

But if you already have meaningful exposure to the banks, it might be worth considering other dividend options instead to maintain a diversified portfolio.

Two top alternatives to ANZ Bank are as follows:

Dicker Data Ltd (ASX: DDR)

I think that this founder-led computer software and hardware wholesale distributor is one of the best dividend options on the local share market right now. Despite the fact that its shares are up sharply over the last 12 months, its planned 18 cents per share fully franked dividend for FY 2018 still equates to a market-beating 6.35% yield. Although management only expects its earnings to grow 6% this year due to a spot of temporary weakness in its New Zealand business following the loss of a contract, I think this level of growth more than justifies the 17x trailing earnings multiple that its shares trade at today.

Telstra Corporation Ltd (ASX: TLS)

Last week this telco giant’s shares fell to a multi-year low. Concerns over its future profitability and the impact this will have on its dividend have largely been the catalyst for this decline. While its share price decline has been hugely disappointing for existing shareholders, I think it has created a buying opportunity for non-shareholders. I’m a little more bullish on Telstra’s prospects than most and believe there’s a reasonably strong chance the Federal Government will write down the value of the NBN. This would allow Telstra to benefit from higher NBN margins and reduce the gap in its earnings. In addition to this, I think 5G could be a real cash cow for the company when it hits the market within the next couple of years. All being well, this should at least keep Telstra’s 22 cents per share dividend safe for the next few years. At the current price this equates to a fully franked 7% yield.

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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 and has recommended Dicker Data Limited and Telstra 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 Scott Phillips.

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