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3 top dividend shares on my shopping list

I think that Australian income investors are a lucky bunch due to the high number of quality dividend shares with generous yields that can be found on the local market.

Three that are on my shopping list right now are listed below. Here’s why I like them:

Accent Group Ltd (ASX: AX1)

Accent Group is a footwear retailer which I think would be a great option for income investors. In FY 2018 Accent grew its net profit after tax by 17.9% to $47.1 million thanks to strong online sales growth and a significant improvement in its gross profit margin through vertical brand sales and reduced discounting. Digital sales grew by 131% on the prior corresponding period despite the arrival of Amazon in the Australian market. The good news is that the company has had a strong start to FY 2019 and is tracking ahead of its like for like sales growth targets. I believe this puts it in a great position to grow earnings and its dividend meaningfully this year. At present its shares offer a trailing fully franked 4.1% dividend.

Australia and New Zealand Banking Group (ASX: ANZ)

I think that ANZ Bank would be a great option for investors that have little exposure to the banking sector already. Thanks to its high CET1 ratio, low bad debts, and recent out of cycle rate rise, I believe it is well placed to grow its earnings and dividend in FY 2019. If it achieves this then I wouldn’t be surprised to see its shares rerate higher again. At present its shares provide a trailing fully franked 5.6% yield.

Rural Funds Group (ASX: RFF)

This real estate property trust is focused on agricultural assets and has a diverse and quality portfolio. It currently owns 44 properties across six different agricultural sectors including cattle, wine, and cotton production. The properties have a weighted average lease expiry (WALE) of 12.3 years, which provides stability of income and long term rental growth via a mix of indexation mechanisms. I expect this will lead to solid distribution growth in the coming years. In FY 2019 management plans to pay a distribution of 10.43 cents per unit, equating to a forward yield of 4.8%.

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You might not know this market leader's name, but it's rapidly expanding into a highly profitable niche market here in Australia. Even better, the shares boast a strong, fully franked dividend that should balloon in the years to come. In other words, we're looking at the holy grail of incredible long-term growth potential AND income you can watch accruing in your account in real time!

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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.

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