Fortunately for income investors in this low interest rate environment, the Australian share market is one of the most generous markets in the world with an average dividend yield of 4%.
Out of the plethora of options that income investors have, three of my favourites are listed below. Here's why I would buy them:
BHP Group Ltd (ASX: BHP)
I think this mining giant is a great option for income investors that are comfortable with investing in the resources sector. Due to favourable commodity prices and its world class low-cost operations, I believe BHP is well-placed to generate significant free cash flows again in FY 2020. And with management having a penchant for returning the vast majority of it to shareholders, I believe this bodes well for its dividend this year. I estimate that its shares currently offer a fully franked forward 6% dividend yield.
Scentre Group (ASX: SCG)
Another high yield option for income investors to consider is Scentre. The retail property group owns and operates the Westfield properties in the ANZ region. These properties are some of the most highly regarded retail assets in the region and enjoy hundreds of millions of customer visits each year. The growing popularity of its centres with consumers has had a positive impact on its occupancy rate, which at the last count was up at 99.3%. I'm confident this trend will continue for the foreseeable future, putting Scentre in a position to grow its distribution at a decent rate over the next five years. At present its units offer an estimated forward 5.8% distribution yield.
Super Retail Group Ltd (ASX: SUL)
A third option for income investors to consider is Super Retail. It is the retail group behind chains such as Rebel and Super Cheap Auto. I have been impressed at the way the company has continued to deliver solid profit growth at a time when many of its retail peers have struggled with weaker consumer spending. I believe this bodes well for its growth when trading conditions eventually improve. At present I estimate that its shares offer a forward fully franked 5.1% dividend yield.
