With an average dividend yield of almost 4%, the Australian share market is one of the most generous markets in the world.
Which certainly is a big positive given the low interest rate environment we are living in.
Amongst the many options for investors to choose from, three of my favourites are listed below:
BHP Group Ltd (ASX: BHP)
I think that this mining giant would be a good option for income investors that are not averse to investing in the mining sector. Of all the many options in the sector, I feel BHP is the highest quality. This is due to the quality and diversity of its global operations and the high levels of free cash flow they are generating. I feel this bodes well for its dividends, given management’s penchant for returning the majority of its free cash flow to shareholders. In light of this, I estimate that its shares currently provide a fully franked forward 6% dividend yield.
Telstra Corporation Ltd (ASX: TLS)
Another option for income investors to consider is this telco giant. I think it is a great option now that the NBN rollout is at the half way stage, as this means that the negative impacts of the rollout are going to peak this year. And with competition becoming rational and the 5G launch expected to be a major boost for Telstra, I feel its outlook is the best it’s been in years. At present its shares offer a trailing fully franked 4.7% dividend.
VanEck Vectors Australian Banks ETF (ASX: MVB)
I think the big four banks are all in the buy zone right now, but if you’re not sure which one to buy then you could get a piece of them all with this ETF. The VanEck Vectors Australian Banks ETF gives investors the option of owning all the big four banks, the regional banks, and also Macquarie Group Ltd (ASX: MQG). Its shares currently provide a 5.43% partially franked dividend.
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Returns As of 6th October 2020
Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.