According to the latest ASX 30 Day Interbank Cash Rate Futures for April 2019, the market has currently priced in an 11% chance of a rate cut at the next Reserve Bank meeting.
Whilst I think a cut at next month’s meeting is unlikely, unless economic data improves greatly over the coming months, I think the predictions made by economists at Westpac Banking Corp (ASX: WBC) in its latest economic report are likely to come true.
Australia’s oldest bank has tipped the central bank to cut rates twice this year. It has forecast the first cut to take place in August and the second in November, and then sees the cash rate being held at just 1% until at least December 2020.
If this is accurate then I think it could be four to five years until rates return to more normal levels.
Whilst this is great for borrowers, it’s very disappointing for income investors and savers. But the good news is that the Australian share market is here to save the day with its large number of dividend shares.
Three which I think income investors ought to consider right now are as follow:
Australia and New Zealand Banking Group (ASX: ANZ)
Whilst I think all of the big four would be good options for income investors, my preference remains ANZ due to its strong capital position and overweight exposure to a solid performing commercial lending market. Its shares currently offer investors a trailing fully franked 6% dividend yield.
Aventus Retail Property Fund (ASX: AVN)
Aventus is a retail property fund focused on large format retail centres and counts many of Australia’s biggest retailers as tenants. It recently reported a 6.3% increase in half year funds from operations to $47 million thanks to high occupancy levels and a 3.3% increase in like for like net property income. The fund’s units currently offer a trailing 7.3% distribution.
National Storage REIT (ASX: NSR)
National Storage is the ANZ region’s largest self-storage operator with 146 centres and a growing pipeline of development and acquisition opportunities. It has been performing very well over the last few years and looks set to build on this in FY 2019. As a result, management recently advised that it plans to increase its distribution to between 9.6 cents and 9.9 cents per unit in FY 2019. This equates to a yield of between 5.5% and 5.7%.
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Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia has recommended AVENTUS RE UNIT and 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.