When share markets are falling heavily as they have done over October and some of November one of the only consolations for many investors is that the shares they own still pay them strong dividends on a regular basis.
In fact in the share market it’s easy to beat the low returns available if you put cash in your bank in a term deposit. For example Westpac Banking Corp (ASX: WBC) is offering just 2.3% interest on a one to two-year term deposit as at November 18, 2018. Once you adjust for the fact the cost of consumer goods is rising at around 1.9% per year, you’re only making a tiny return on your cash.
Dividend paying shares with defensive revenues then may represent a better alternative, especially if you hold them for the long term.
Let’s take a look at four to consider.
APA Group Ltd (ASX: APA) is the gas pipeline infrastructure and transportation group that recently had its proposed takeover by Hong Kong-based CKI Group effectively rejected by the Foreign Investment Review Board. Its gas transporting pipelines are critical assets according to the Australian government and also generate big profits. It offers a trailing yield of 5.05% based on a share price of $8.96.
Australia & New Zealand Banking Group (ASX: ANZ) recently reported an adjusted cash profit of $6,547 million for the year ending September 30, 2018, which enabled it to pay a full year dividend of $1.60 per share. As the shares sell for $25.36 today ANZ offers a trailing yield of 6.3% plus the tax effective benefits of full franking credit. In a November 14 note out of Goldman Sachs, ANZ Bank was also named as its best bank share to buy now.
Woolworths Group Ltd (ASX: WOW) will be well known to Australian investors as the supermarkets operator and retailer behind discount stores like Big W. Over FY 2018 Woolworths paid out $1.03 per share in dividends including a 10 cents per share special dividend. If we back out the special dividend as a one off the group yields 3.2%, or 3.6% including the special dividend that came about as a result of improved trading performance.
Transurban Group (ASX: TCL) is the toll road operator with interests across Sydney, Melbourne, SE Queensland and the US. Toll roads offer very defensive revenue streams on good gross profit margins as drivers have no choice but to pay in order to use the toll roads. Based on a share price of $11.46 it offers a trailing yield of 4.8% and is guiding for a lift in dividends to 59 cents per share over FY 2019. This equals a forward yield of 5.15%.
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Motley Fool contributor Yulia Mosaleva has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Transurban Group. 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.