With an average dividend yield of approximately 3.9%, the Australian share market is one of the most income-friendly markets in the world.
Which certainly is a big positive given the low interest rate environment that we are living in today.
Amongst the good number of options that income investors have, three of my favourites are listed below. Here’s why I would buy them:
Aventus Group (ASX: AVN)
Earlier this month this owner and operator of large format retail parks across Australia reported its full year results and revealed funds from operations (FFO) of $96 million. This was an increase of 7.9% on last year’s FFO of $89 million and was driven by its high occupancy rate and like-for-like net operating income growth of 3.5%. As a result of its strong form, the company declared distributions of 16.6 cents per security for the year. Based on its FY 2020 FFO per security growth guidance of 3% to 4%, I estimate that its shares offer a 6.5% forward distribution yield.
National Storage REIT (ASX: NSR)
This real estate investment trust is focused on growing its network of self-storage units throughout Australia and New Zealand. It has been on a bit of an acquisition spree this year and has grown its network to 168 centres. This expansion and solid demand led to National Storage growing its underlying earnings by 21% to $62.4 million in FY 2019. The good news is that management expects its earnings to continue growing in the current financial year and has provided underlying earnings growth guidance of 4%. Based on this guidance, I estimate that its shares offer a forward 5.25% distribution yield.
Super Retail Group Ltd (ASX: SUL)
Super Retail is the retail group behind brands including Macpac, Rebel and Super Cheap Auto. It was able to overcome tough trading conditions in the retail sector in FY 2019 to deliver a solid 7% increase in profit. This allowed the company to increase its dividend to 50 cents per share fully franked, which equates to a 5.4% dividend yield. Pleasingly, management advised that it has had a positive start to FY 2020, which could mean another year of solid growth for the company’s earnings and dividend.
5 stocks under $5
We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.
And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!
*Extreme Opportunities returns as of June 5th 2020
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Super Retail Group Limited. 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.
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