Why I would buy ANZ and 2 other quality dividend shares

With an average dividend yield of approximately 4%, the Australian share market is one of the most income investor-friendly markets in the world.

But with so many dividend shares to choose from, it can be hard to decide which ones to buy.

To help narrow things down a touch, I’ve picked out three of my favourites. They are as follows:

Australia and New Zealand Banking Group (ASX: ANZ)

My favourite option in the banking sector in 2019 is ANZ. The reason for this is that I believe it is the best positioned bank of the big four to deliver earnings growth this year due to its overweight exposure to business lending. In addition to this, the company has a very strong capital position, low bad debt charges, and material cost cutting opportunities. Overall, I think income investors that have little exposure to the banking sector ought to consider ANZ for its trailing fully franked 5.7% dividend yield.

Dicker Data Ltd (ASX: DDR)

One of my favourite dividend shares on the Australian share market is this founder-led wholesale distributor of computer hardware and software. It has lifted its dividend for four years in a row and looks well-positioned to continue this run in FY 2019 thanks to new vendor agreements and favourable industry tailwinds. At present the company’s shares offer a trailing fully franked 6.1% dividend, which is paid in quarterly instalments.

Rural Funds Group (ASX: RFF)

Another quality option for income investors could be this real estate property trust. As its name implies, Rural Funds has a focus on Australian agricultural assets. In the first half of FY 2019 the trust’s high-quality asset portfolio generated a 7% increase in adjusted funds from operations (AFFO) to 6.4 cents per share. This allowed its board to increase its first half distribution by 4% to 5.22 cents and provide full year distribution guidance of 10.85 cents per unit. If it delivers on its guidance, then it will mean a yield of just over 4.8%. Pleasingly, due to the quality of its assets and the fact that it has rental indexation built into its tenancy agreements, I expect similar distribution growth over the coming years.

Looking for more dividend ideas? Then don't miss out on these top income shares that have been rated as buys.

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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 and RURALFUNDS STAPLED. 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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