A lot of people rely on investment income to fund their life. It could be retirees who have worked hard and now want to enjoy the fruits of their labour. It could be someone who was injured and received a large payout. It could be a lucky person who inherited a lot of money. It could a regular person who’s building wealth and wants an income stream. You won’t get decent income from bank accounts or bonds these days. The best place to find good income is the share market. Here are three dividend ideas: WAM Leaders Ltd (ASX:…
A lot of people rely on investment income to fund their life.
It could be retirees who have worked hard and now want to enjoy the fruits of their labour. It could be someone who was injured and received a large payout. It could be a lucky person who inherited a lot of money. It could a regular person who’s building wealth and wants an income stream.
You won’t get decent income from bank accounts or bonds these days. The best place to find good income is the share market. Here are three dividend ideas:
WAM Leaders Ltd (ASX: WLE)
WAM Leaders is a listed investment company (LIC) run by Geoff Wilson and his investment team. It focuses on shares that are in the S&P/ASX 200, essentially the large caps of Australia.
It’s possible to create good returns in this space of the market. The WAM Leaders portfolio has returned 17.8% before fees over the past year and an average of 13.4% before fees per annum since inception in May 2016. For both of these time periods it has outperformed the S&P/ASX 200 Accumulation Index after management fees and performance fees.
It also keeps a decent of cash on hand for protection and opportunities, at June 2018 it had 13.3% of the portfolio as cash. I think this LIC will continue to outperform the index after fees and is therefore worthy of buying for the total returns and rising dividend payment.
It currently has a grossed-up dividend yield of 6%.
Future Generation Investment Company Ltd (ASX: FGX)
You could describe this business as a fund of funds. It invests its money into the funds of some of Australia’s top fund managers.
The compelling difference is that Future Generation Investment Company has no management fees or performance fees, instead it donates 1% of its net tangible assets (NTA) per year to youth charities – hence the ‘Future Generation’ part of the name.
Not only does it have a very worthy cause, but one of its main objectives is to pay a growing stream of fully franked dividends to its shareholders.
It currently has a grossed-up yield of 4.8%.
Arena REIT No 1 (ASX: ARF)
As the name might suggest, this is a real estate investment trust (REIT) that owns buildings in sectors such as childcare, healthcare, education and government tenanted facilities leased on a long-term basis with the objective to generate an attractive and predictable distribution to investors with earnings growth prospects over the medium-to-long-term.
Most of its tenants are in the childcare industry, some of its largest childcare tenants include Goodstart Early Learning, Affinity Education, Green Leaves and G8 Education Ltd (ASX: GEM). However, by income its second most important tenant is Primary Health Care Limited (ASX: PRY) because Arena also owns seven healthcare buildings.
Arena has steadily increased its operating earnings and distribution each year over the past few years thanks to an occupancy rate of 100%. It currently has a trailing distribution yield of 5.77%.
At the current prices I am more interested in WAM Leaders and Future Generation than Arena. I have a feeling rising interest rates could hurt the value of Arena in the medium-term, but it would still be a decent choice for income.
An even better choice for income could be this great ASX share that could increase its FY18 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 owns shares of ARENA REIT STAPLED. 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.