Income investors certainly are spoilt for choice with the Australian share market.
With an average dividend yield of approximately 4%, the local market is one of the most generous in the world. Perhaps the hardest thing to do is to decide which dividend shares to buy.
Three of my favourites right now are listed below. Here’s why I like them:
Rural Funds Group (ASX: RFF)
Last time we went through a rate hike cycle one of the best performing areas of the market was the agriculture sector. Whilst there’s no guarantee this will happen again this time around, it would be a nice boost to a company that is already on the rise. Rural Funds owns 38 properties across six different agricultural sectors. Its properties currently have an average tenancy of 12.5 years left to run, which I believe provides a lot of clarity on its future growth. Especially considering rental indexation has been built into them. Rural Funds’ shares currently offer a trailing distribution yield of 4.9%.
WAM Capital Limited (ASX: WAM)
WAM Capital is a leading listed investment company which I think would be a great option today. Although its shares are trading at a premium to their NTA, I am confident its stock picking team will generate returns that lifts its NTA accordingly over the next 12 to 24 months. This should also put WAM Capital in a position to continue its impressive run of dividend increases. The company is on course to make it nine years of increases in a row this year. Based on its last close price, WAM Capital’s shares offer a trailing fully franked 6.4% dividend.
Westpac Banking Corp (ASX: WBC)
I think recent declines in Australia’s banking sector have brought the banks’ shares down to very attractive levels for income investors. And while there are a number of quality options to choose from, my preference remains Westpac. This is because the share price of Australia’s oldest bank is trading on lower than historical average multiples and provides a market-beating trailing fully franked 6.4% dividend.
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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. 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.