3 top dividend shares to buy instead of Telstra

Although the current Telstra Corporation Ltd (ASX: TLS) share price means that the telco giant offers an incredibly generous dividend yield at present, I’m not convinced that the company will be able to maintain this dividend in FY 2019 and expect the Telstra board to announce a sizeable cut next month.

In light of this, I think income investors ought to skip Telstra’s shares for now and consider these quality alternatives instead:

Coles Group Ltd (ASX: COL)

Although this supermarket giant hasn’t announced its dividend plans yet, it hasn’t stopped brokers from predicting its potential pay outs. According to a note out of the Macquarie equities desk late last year, its analysts expect Coles to pay a fully franked full year dividend of 65.7 cents per share. Based on its last close price, this would mean a forward fully franked 5.6% yield. I think this could make it worth considering an investment in the supermarket giant this month.

National Storage REIT (ASX: NSR)

I think this real estate investment trust is well worth considering. National Storage is one of Australia and New Zealand’s leading self-storage providers with a growing network of centres. Over the last five years the company has delivered the perfect mix of growth in its network and revenue per available square metre metric, leading to strong income and distribution growth. The good news is that I expect more of the same in FY 2019, especially with management revealing that $100 million worth of potential acquisitions are under consideration in the highly fragmented market. At present the company’s units provide a trailing 5.4% distribution yield.

Rural Funds Group (ASX: RFF)

This agriculture-focused real estate property trust could be another great option for income investors. I’m a big fan of Rural Funds due to its quality portfolio of assets which are spread across different geographies and different areas of production. In addition to this, the company has long-term tenancy agreements in place which have rental indexation built into them. I think this puts Rural Funds in a good position to continue increasing its dividend at a solid and predictable rate over the coming years. Rural Funds’ units currently offer a trailing 4.7% yield.

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 and Telstra Limited. The Motley Fool Australia owns shares of COLESGROUP DEF SET. 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.

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