The income you can get by leaving money in the bank is pretty bad these days. I think it's worth investing in quality ASX dividend shares.
It's crazy to think that with a million dollars in the bank the most you might be able to get is $30,000, with most accounts offering less of a return than that.
So, what should an income-seeking investor do?
I think Australian shares are the answer. Many experts agree that, on the income side of things, Australian share investments are hard to match for the income they can produce.
Here are three good ideas:
Brickworks Limited (ASX: BKW)
There are few shares on the ASX with a dividend record like Brickworks. It has increased or maintained its dividend every year for the past 20 years.
It has managed to do this largely because of two reasons. Its construction segment, including Austral Bricks, has been generating long-term growth due to the population and building boom that Australia has experienced. This should continue over the long-term.
Its 42.7% holding of Washington H. Soul Pattinson and Co. Ltd (ASX: SOL) has also done very well.
It currently has a grossed-up dividend yield of 4.5%.
Challenger Ltd (ASX: CGF)
Challenger has grown or maintained its dividend each year since 2005, including through the GFC which is pretty impressive for a financial business.
The business has been steadily growing thanks to a growing amount of annuity sales to retirees every year. People just want a reliable source of income without worrying about share markets.
However, I think it would be a good strategy to buy shares of Challenger and ride the retirement wave. It currently has a grossed-up dividend yield of 4.8%.
InvoCare Limited (ASX: IVC)
The leading funeral business in Australia and New Zealand has been steadily growing through acquisitions and the long-term growth rate in the number of funerals due to Australia's ageing population.
Death volumes are expected to grow by 1.4% per annum between 2016 to 2025 and then increase by 2.2% per annum from 2025 to 2050. This is a strong, but morbid, tailwind.
It currently has a grossed-up dividend yield of 5.4%.
Foolish takeaway
At the current prices I believe all three are trading at attractive value for their long-term. If I could only pick one I'd go far Challenger – the next few years looks promising with a number of new distribution deals and supportive government policies coming through.
