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3 top dividend shares I want in my portfolio

When it comes to dividends the Australian share market is one of the most generous in the world.

At present the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) offers an average dividend yield of approximately 4%.

This compares favourably to the S&P 500 in the United States which offers an average dividend yield of just 1.74%.

While there are a lot of quality options to choose from on the local market, three of my current favourites are listed below. Here’s why I like them:

Adairs Ltd (ASX: ADH)

One of my favourite dividend shares at the moment would have to be Adairs. I think the home furnishings retailer could be a great option for income investors due to the success it is having with its focus on large homemaker stores and its online channel.  In FY 2018 the company grew earnings at an impressively strong rate, allowing its board to declare a total dividend of 13.5 cents per share. This was a massive 68% increase on FY 2017’s dividend. Based on its last close price, this equates to a trailing fully franked 5.3% yield. The good news is that I believe this dividend can continue growing in FY 2019 thanks to the positive start it has had to the new financial year.

Aventus Retail Property Fund (ASX: AVN)

Aventus Retail Property Fund is a specialist fund and asset manager of large format retail centres. Its units may be trading close to a 52-week high but they still offer an extremely generous distribution yield. Based on its last close price, the property fund’s units currently offer investors a trailing 7.4% yield. I believe this yield could widen further over the next 12 months if the property group can build on FY 2018’s solid result. Aventus saw its funds from operations rise 2.3% to $89 million last year thanks largely to its high occupancy levels.

BHP Billiton Limited (ASX: BHP)

Income investors that are looking for exposure to the resources sector might want to consider this mining giant. Following a strong result in FY 2018, the BHP board was able to increase its dividend at a fair rate. This means its shares currently offer a trailing fully franked 4.7% dividend. Due to favourable commodity prices and solid global economic growth, I expect another strong result from BHP in FY 2019. This should put its board in a position to increase its pay out once again. Furthermore, with the company recently offloading non-core assets, I suspect that a special dividend could be declared next year.

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

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