With an average dividend yield of approximately 4%, the Australian share market is one of the most generous in the world. Considering the low interest rate environment that we are living in, that certainly is a blessing.
But with so many dividend shares to choose from, it can be hard to decide which ones to buy.
To narrow things down I have picked out three of my favourites to consider. They are as follows:
Collection House Limited (ASX: CLH)
I think Collection House could be a good option for income investors due to its above-average yield and solid growth prospects. After a tricky couple of years, this receivable management company has come back with a bang this year and looks a lot stronger. Improvements in collection efficiencies, technology adoption, and data analysis appear to have led to Collection House generating higher returns on its investments. I think this could put it in a position to grow earnings and its dividend at a strong rate over the coming years. Based on the last close price, its shares offer a trailing fully franked 4.7% dividend.
National Australia Bank Ltd (ASX: NAB)
The ongoing Royal Commission has weighed heavily on investor sentiment lately and dragged bank shares close to multi-year lows. While I don’t expect a sudden turnaround in their performances, I remain confident that in the medium term they will move higher once again as the negative news flow eases. This could make it an opportune time to snap up shares in National Australia Bank and take advantage of its trailing fully franked 7.4% dividend.
National Storage REIT (ASX: NSR)
Investors looking for a high yield dividend with the potential to grow at a steady rate over the medium term might want to consider this storage giant. This year the company aims to pay a distribution of approximately 9.8 cents per share, which works out to be a yield of just under 6.2%. I believe its pipeline of new developments and redevelopments, combined with population growth and downsizing by baby boomers, should position National Storage perfectly for long-term growth.
This top dividend share may not have the biggest yield on the market, but it certainly is growing at an explosive rate. This could make it a real dividend star of the future.
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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 National Australia Bank Limited. The Motley Fool Australia has recommended National Storage REIT. 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.