Last week National Australia Bank Ltd (ASX: NAB) joined rival Westpac Banking Corp (ASX: WBC) by becoming the latest bank to rule out a cash rate hike not only this year but also in 2020.
The banking giant also warned that the Reserve Bank could reduce rates before it takes them higher.
It said: "We have removed our expectation for a rate rise in late-2020 and now expect the cash rate to remain on hold over the forecast horizon. While our central case is for the cash rate to remain on hold, based on the balance of risks, the next move could well be down – potentially as soon as H2 2019."
While this is positive news for borrowers, it is another bitter blow to income investors and savers.
Thankfully there are a large number of shares on the Australian share market that offer yields that smash current rates available on other interest-bearing financial instruments.
Three to consider are listed below:
Accent Group Ltd (ASX: AX1)
Accent is the footwear group responsible for retail brands such as The Athlete's Foot, HYPE DC, and Platypus. Despite weak consumer sentiment, Accent has had a strong first half and expects to deliver interim EBITDA growth in the range of 15% to 20%. I believe this will put the Accent board in a position to increase its interim dividend strongly. At present its shares offer a trailing fully franked 4.9% dividend.
Dicker Data Ltd (ASX: DDR)
Dicker Data is a founder-led computer hardware and software distributor in Australia and New Zealand. In FY 2018 the company smashed its guidance with total revenue up 14.4% to $1,494 million and profit before tax up 15% to $46 million. This allowed the Dicker Data board to lift its full year dividend to 20.2 cents per share, which equates to a fully franked 6.5% yield today.
National Australia Bank
Instead of having your money in a NAB savings account, I would suggest savers consider buying the bank's shares. After all, based on its last close price, NAB's shares currently offer a trailing fully franked 8.2% dividend. While there is a chance that this dividend will be cut, I'm optimistic that its exposure to a strong performing business lending market will put it in a position to sustain it.
