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Why I think retirees should buy ANZ and 2 other ASX dividend shares

With rates unlikely to go higher for a couple of years, if I were a retiree I would look to the share market for a source of income.

After all, with an average dividend yield of approximately 4%, the Australian share market offers income investors far better potential returns than savings accounts and term deposits put together.

Three shares that I believe would be suitable for retirees in search of income are listed below:

Australia and New Zealand Banking Group (ASX: ANZ)

If you don’t already have meaningful exposure to the banking sector, then I think it could be well worth considering an investment in ANZ’s shares. Even after a strong run since Christmas Eve the bank’s shares offer a generous trailing fully franked 6% yield. I believe ANZ is well-positioned to at least maintain this dividend in FY 2019 thanks to the bank’s strong capital position, cost cutting opportunities, low bad debt charges, and overweight exposure to business lending.

Dicker Data Ltd (ASX: DDR)

I think that this wholesale distributor of computer hardware and software would be a great option for retirees. This is because I believe Dicker Data has a robust business model which is well-positioned for growth over the medium term. Furthermore, the company pays its dividends in quarterly instalments, which is ideal for those looking for a regular source of income. Dicker Data recently provided guidance for 10% revenue and profit growth and a 22 cents per share dividend in FY 2019. This dividend equates to a forward fully franked 5.9% yield.

National Storage REIT (ASX: NSR)

Another top option for retirees could be this self-storage-focused real estate investment trust. I believe its defensive qualities and generous dividend yield make it a good option for investors in search of low risk income shares. National Storage is the ANZ region’s largest self-storage operator with 146 centres and a growing pipeline of development and acquisition opportunities. Management is positive on its prospects in FY 2019 and recently advised that it plans to pay a full year distribution of 9.6 cents to 9.9 cents per unit. This equates to a yield of between 5.4% and 5.6%.

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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. 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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