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Forget term deposits and buy these high yield ASX dividend shares

At present the two to five-year term deposits on offer from Commonwealth Bank of Australia (ASX: CBA) offer an interest rate of 1.5% per annum on deposits of $50,000 and over.

This is barely keeping up with inflation and, with rates likely to go lower in the near term, there’s a real danger that term deposits will soon be offering yields that are less than the inflation rate.

If this happens, it essentially means that the real value of your funds will be diminishing each year if they are invested in these assets.

In light of this, I would suggest income investors consider switching their funds into one of these dividend shares that offer far greater yields:

Australia and New Zealand Banking Group (ASX: ANZ)

Instead of investing in its term deposits, I would buy this banking giant’s shares. After all, with the housing market showing signs of improvement at long last, ANZ’s earnings could be given a boost in the near future from increasing demand for mortgage loans. In addition to this, I believe its strong capital position supports its current pay out and could even allow for buybacks or a special dividend. At present ANZ’s shares offer a trailing fully franked 5.8% dividend yield.

National Storage REIT (ASX: NSR)

National Storage is one of the largest self-storage providers in the ANZ market with a total of 164 centres. Thanks to solid demand and its growth through acquisition strategy, National Storage has been growing its income and distribution at a solid rate in recent years. Pleasingly, I expect the same trends to drive further solid growth in the coming years, which bodes well for its  distribution. At present its shares offer a forward yield of 5.4%.

Scentre Group (ASX: SCG)

A final dividend share to consider buying is Scentre Group. It is the owner of all the Westfield properties in the ANZ region. These are amongst the highest quality retail assets in the region and command a sky high occupancy rate. In light of this, I continue to believe Scentre is well-placed to continue growing its income and distribution at a steady rate over the next few years. At present its units offer a trailing 5.6% distribution yield.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended National Storage REIT and Scentre Group. 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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