Due to increased competition and slender NBN margins, I’m not overly convinced that Telstra Corporation Ltd (ASX: TLS) will be able to generate enough free cash flow to maintain its 22 cents per share dividend in FY 2019.
In light of this, I would suggest investors resist the temptation to snap up the telco giant’s shares today and wait to see what happens when it announces its half year results next month.
In the meantime I think these high yield dividend shares could be better options right now:
Australia and New Zealand Banking Group (ASX: ANZ)
Although the banks have rallied notably higher over the last couple of weeks, I don’t believe it is too late to snap up shares. One of my favourite options in the sector right now is ANZ Bank, which offers income investors a trailing fully franked 6.3% yield at present. I think this generous yield and the low multiples that its shares trade on make it a great option. One potential positive on the horizon is the release of the Royal Commission final report in approximately three weeks If this report contains no nasty surprises then I suspect buyers will return to the banks in their droves.
Dicker Data Ltd (ASX: DDR)
This year the Dicker Data board intends to pay a full year 18 cents per share dividend in quarterly instalments. Based on its last close price, this equates to a yield of approximately 6.4%. I think this yield and these regular pay checks make the computer software and hardware distributor a great option for income investors in this low interest rate environment. Especially with its robust business model and solid growth prospects putting the company in a strong position to continue increasing its dividend for a number of years to come.
Rural Funds Group (ASX: RFF)
I think this real estate property trust could be another top option for income investors. As its name implies, Rural Funds has a focus on agriculture assets and has a growing portfolio of income generating properties across different geographies and industries. Thanks to long-term tenancy agreements which have rental indexation built into them, I believe it is well positioned to continue increasing its dividend at a decent 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 Dicker Data Limited, RURALFUNDS STAPLED, and Telstra Limited. 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.