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 could be interested in:
NAOS Absolute Opportunities Co Ltd (ASX: NAC)
This is the listed investment company (LIC) run by Naos that focuses on the larger end of the share market. It invests in industrial companies with market capitalisations between $400 million and $1 billion. Indeed, it’s looking to change its name to NAOS Ex-50 Opportunities Company to reflect its hunting ground.
Over the past three years its portfolio has returned an average of 16.26% per annum before fees, making it one of the highest-performing LIC portfolios on the ASX. This has allowed the company to increase its dividend every year since it started paying in FY15.
It has just proposed changing to quarterly dividends, which could be good for an investor’s cashflow. It has a grossed-up dividend yield of 7.86% assuming it pays at least a fully franked annual dividend of 5.5 cents per share over the next 12 months.
Cromwell Group (ASX: CMW)
Cromwell is a property business that owns property and runs property funds. It leases a bigger percentage of its properties to government bodies than a lot of other real estate investment trusts (REITs).
Property is an attractive long-term asset and Cromwell has performed well for shareholders through this economic cycle.
It has a high payout ratio and has a lot of debt on its balance sheet, which means its share price is lower and the distribution yield is boosted to 7.6%.
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is the listed investment company (LIC) run by Wilson Asset Management (WAM) that focuses on the mid-cap to large-cap space of the ASX.
Over the past year it has outperformed its ASX index benchmark by 8.5%, which is quite impressive in my opinion. It is increasing its dividend thanks to the profit outperformance.
If it pays 5 cents per share over the next 12 months as dividends, it currently has a grossed-up dividend yield of 6.26%.
All three shares are attractive dividend payers. The rising interest rate environment means I’d be very cautious about investing in Cromwell shares at the moment. However, the Naos and WAM LICs have both proven to be solid dividend choices.
Another good income idea could be this top stock which just increased its dividend by more than 25%.
It's been a nail-biter of a reporting season here in the first half of 2018.
But the real action, in my opinion, is what companies are doing with dividends.
What does this mean for you? Well there is one stock I've found that could very well turn out to be THE best buy of 2018. And while there's no such thing as a 'sure thing' when it comes to investing - this ripper might come as close as I've ever seen.
Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. 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.