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 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%.
Foolish takeaway
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.
