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These 3 top dividend shares have yields above 4.5%

Credit: Simon Cunningham

It’s getting harder to find good sources of income these days with banks offering a very pitiful interest rate on money in the bank. The best rate you can find these days is between 2.8% to 3%, depending on the bank and its rules.

Shares are the only game in town to generate good income, which is why income investors would be well suited to look at some shares on the ASX.

However, just because something has a big yield doesn’t mean it’s necessarily good.

Here are some options I think dividend investors should be interested in:

Macquarie Group Ltd (ASX: MQG)

Macquarie is Australia’s leading investment bank. I much prefer Macquarie to the other big banks because it earns a majority of its earnings outside of Australia and a lot of its earnings don’t relate to the mortgage sector.

I think Macquarie has identified excellent growth areas in the global economy such as infrastructure and renewable energy which should allow it to grow in the long run, regardless of what part of the cycle the global economy is in. Both areas will require many billions of investment, which Macquarie can provide.

It’s currently trading with a partially franked dividend yield of 4.58%.

Japara Healthcare Ltd (ASX: JHC)

Japara is one of Australia’s largest aged care providers. It provides thousands of beds for elderly residents and it expects to continue to grow through organic bed allocations and acquisitions. For example, it recently announced it was acquiring Riviera Health, which added another 500 bed licenses to Japara’s total.

If revenue per resident increases over the years and if Japara is assigned more licenses it may be a good slow-and-steady growth business with quite defensive earnings.

It currently has a trailing partially franked dividend yield of 5.12%.

WAM Research Limited (ASX: WAX)

WAM Research is (currently) my favourite listed investment company (LIC) offered by Wilson Asset Management. It purely focuses on the underlying quality of the businesses it chooses and generally looks at shares that are small to medium sized industrial companies.

It has been very successful with this strategy, having delivered an average return of 15.5% per annum before fees over the past three years. It has done this whilst keeping a good portion of the portfolio in cash, in its March 2018 update it revealed 28% of the portfolio was cash.

It currently has a fully franked dividend yield of 6.09%.

Foolish takeaway

I like all three shares, which is why WAM Research and Japara are already in my portfolio. I like Macquarie but I am waiting until an economic dip to buy as I believe it will fall more compared to most other shares due to the nature of its business. At the current prices I’d be happy to buy Japara and WAM Research for long-term dividend growth.

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Motley Fool contributor Tristan Harrison owns shares of JAPARA DEF SET and WAM Research Limited. The Motley Fool Australia has no position in any of the stocks mentioned. 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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