With rates going nowhere for some time, if I were a retiree I would look to the share market for a source of income.
After all, with an average dividend yield of approximately 4%, the Australian share market offers income investors far better potential returns than savings accounts or term deposits.
Three shares that I believe would be suitable for retirees in search of income are listed below:
Australia and New Zealand Banking Group (ASX: ANZ)
The banks may be out of favour right now, but I believe patient investors could do very well from an investment in many of them. One of my favourites is ANZ Bank. I believe its high CET1 ratio, generous dividend, and attractive valuation makes it one of the better options for income investors in spite of the Royal Commission drama. At present ANZ Bank’s shares offer a trailing fully franked 6% yield.
National Storage REIT (ASX: NSR)
National Storage is one of my favourite real estate investment trusts. It is a provider of self-storage services across a network of 133 centres throughout Australia and New Zealand. In FY 2019 it delivered underlying earnings of $51.4 million, up 12.5% on the prior corresponding period. This was driven by increases in its occupancy levels and same centre revenue per available square metre. The strong performance allowed management to increase its distribution and raise funds for acquisitions in FY 2019. At present National Storage’s shares offer a trailing 5.8% distribution yield.
Rural Funds Group (ASX: RFF)
Another real estate investment trust that I rate highly is Rural Funds Group. It has a high quality and diverse portfolio of assets comprising 44 properties across six different agricultural sectors. In FY 2018 the company delivered a 29% increase in earnings to $44 million. Some of this was driven organically, with other key drivers being the lease income from the Natal cattle property acquisition and valuation increases on assets in the cattle, cotton, almond, macadamia and water sectors. This year management has predicted organic earnings growth of 4% and plans to pay a distribution of 10.43 cents per unit. This equates to a forward yield of 4.9% based on its last close price.
And finally, here's another top share for income investors to consider this month.
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!
Simply click here to grab your FREE copy of this up-to-the-minute research report on our #1 dividend share recommendation now.
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. The Motley Fool Australia has recommended National Storage REIT. 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.