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3 ASX options for low-risk income in 2020

It’s getting harder and harder to find low-risk income options on the ASX.

With the Reserve Bank cutting interest rates to just 0.75%, investors are having to look further for good risk-adjusted returns.

Luckily for Fools, there are still a few good value buys that can help you diversify your portfolio in 2020.

What are the best options for low-risk yield on the ASX?

It’s best to remember that everyone’s ideal portfolio is based on their own risk and return preferences.

Someone who is risk averse may prefer to hold 100% cash or bonds, while risk-seeking investors might go all-in on ASX growth stocks like Afterpay Touch Group Ltd (ASX: APT).

If your risk tolerance is lower, here are 3 quick and easy options to deliver low-risk ASX income in 2020.

1. Try ASX blue-chip dividends 

Buying stable, high-yield ASX stocks can be a great way to boost your yearly income.

One great option is to invest in a top dividend stock like National Australia Bank Ltd (ASX: NAB) or  Harvey Norman Ltd (ASX: HVN).

A simple $50,000 investment in Harvey Norman shares could be netting you a tidy $3,840 per year. On top of that, the Harvey Norman share price is up 38.31% so far this year.

However, relying on ASX dividends may not be considered a low risk income strategy. Markets can change quickly and earnings pressure can cause share price declines for shareholders in no time.

2. Listed investment trusts offer low-risk income

An increase in the number of ASX listed investment trusts (LITs) has thrown up some more dividend alternatives.

These LITs can be either debt-focused like Gryphon Capital Income Trust (ASX: GCI) or equity-focused, like Australian Foundation Investment Co Ltd (ASX: AFI)

Debt LITs give you a liquid way to invest in non-liquid corporate bonds or loans, which can generate a low-risk ASX income compared to relying on ASX dividends. The equity LITs can provide a diversified, highly-franked dividend income stream.

3. Invest in REITs to get property exposure

If you’re interested in lowering your portfolio correlations, investing in real estate investment trusts (REITs) could be a great option.

Scentre Group (ASX: SCG) is yielding a tidy 4.79% and gives you access to the normally illiquid commercial real estate asset class.

REITs aren’t considered low-risk, but REIT income can generate great risk-adjusted returns for security holders.

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*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. The Motley Fool Australia has recommended 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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