The income you can get by leaving money in the bank is pretty bad these days. 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 ASX 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 ideas:
Arena REIT No 1 (ASX: ARF)
Arena is one of the larger real estate investment trusts (REITs) on the ASX and aims to deliver an attractive and predictable distribution to investors with earnings growth prospects over the medium to long term.
It invests in growing sectors that are supported by favourable demographic and economic trends. This currently means a large majority of its assets are childcare properties, although it does own a few medical buildings too. Goodstart Early Learning and Primary Health Care Limited (ASX: PRY) are its two largest tenants by income.
With a 100% occupancy rate and long rental contracts, there's a lot to like about Arena.
It pays a quarterly dividend and currently has a distribution yield of 6%.
Naos Emerging Opportunities Company Ltd (ASX: NCC)
This is a listed investment company (LIC) and its job is it generate the biggest net returns it can by focusing on small caps with market capitalisations under $250 million.
The Naos investment team have been successful at creating market-beating returns, since inception in February 2013 the LIC has generated an average return per annum of 14.66% after expenses but before management fees.
One of the key aims is to have a sustainable growing fully franked dividend. The dividend has increased each year since FY13 and it currently has a grossed-up dividend yield of 8.8%.
Paragon Care Ltd (ASX: PGC)
This small cap healthcare business is a prime candidate for long-term dividend growth due to the ageing population and steadily-increasing total health expenditure.
The business has increased its dividend each year since 2013 and appears to want to increase it every year after increasing it in 2018 after a statutory profit reduction.
Paragon currently offers a grossed-up dividend yield of 6.4% based on the pre-open share price of $0.69.
Foolish takeaway
I believe all three of these shares are good candidates for continuous dividend increases for the next five years.
I already own shares of Paragon and Arena, I'm waiting for the right opportunity to buy shares of the Naos LIC. At the current pre-open prices I think Paragon looks very attractive.
