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.
