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3 star stocks for income investors

Fortunately for income investors, the Australian share market is one of the most generous in the world with its average dividend yield of approximately 4%.

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 top options for income investors to consider. They are as follows:

BWP Trust (ASX: BWP)

I think that this property trust is one of the best dividend options on the market due to its exposure to the growth of the Wesfarmers Ltd (ASX: WES) operated Bunnings Warehouse business. The hardware giant has arguably been the star of the show for Wesfarmers over the last few years and recently posted a 9.6% increase in Australia and New Zealand sales to $9.6 billion. This is good news for BWP Trust as the majority of its properties are tenanted by Bunnings Warehouse. BWP Trust currently offers a trailing distribution yield of 5.5%.

Rural Funds Group (ASX: RFF)

Rural Funds would have to be one of the best real estate investment trusts on the Australian share market in my opinion. The trust has a focus on agriculture assets and owns 38 properties across six different agricultural sectors including poultry, cattle, and wine production. As of its last update, the tenancies on its assets have an average of 12.5 year to run. I believe these long-term tenancy agreements, and the rental indexation built into them, give investors great visibility on the trust’s long-term earnings and distribution potential. Rural Funds’ shares currently offer a trailing distribution yield of 4.9%.

Westpac Banking Corp (ASX: WBC)

The banks have come under pressure of late due to the Royal Commission and falling house prices. While these developments are clearly a concern, I believe they have been more than priced in now. This could arguably make it a good time to consider snapping up bank shares. I think Westpac could be a good option for income investors due to its generous dividend yield and undemanding valuation. The banking giant’s shares currently offer a trailing fully franked 6.8% dividend.

Room for one more stock in your income portfolio? Then I would consider making it this one. It has grown its dividend significantly this year and looks set to continue doing so in the future.

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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED and Wesfarmers Limited. The Motley Fool Australia has recommended BWP Trust. 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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