With interest rates at record lows and likely to go even lower in 2020, it is becoming harder and harder for income investors to generate a sufficient level of income from traditional interest-bearing assets.
The good news is that the share market is here to save the day. Here are three top dividend shares that can help you beat low rates:
National Australia Bank Ltd (ASX: NAB)
Although its shares pushed notably higher last week, I don’t believe it is too late to get on board. I was very pleased with NAB’s first quarter update and believe it demonstrated just how robust its business is. Pleasingly, I expect more of the same over the remainder of FY 2020 and beyond thanks to its overweight exposure to SME lending, the improving housing market, and its broadly flat expense target. I expect the bank to pay a $1.66 per share fully franked dividend this year. This equates to a dividend yield of almost 6.1%.
Telstra Corporation Ltd (ASX: TLS)
Another dividend share to consider buying is Telstra. Last week the telco giant released a solid half year result which revealed modest EBITDA growth when adjusting for the NBN rollout headwinds. The good news is that peak pain from the NBN is expected to hit Telstra next year. This could mean the company returns to growth potentially as soon as FY 2022. In the meantime, regardless of the TPG-Vodafone merger, I expect the company to deliver strong enough cash flows to maintain its 16 cents per share fully franked dividend. Based on this, Telstra’s shares offer a 4.25% dividend yield.
Vanguard Australian Shares Index ETF (ASX: VAS)
A final option for income investors to consider is the Vanguard Australian Shares Index ETF. This ETF gives investors exposure to a massive 300 shares that are listed on the S&P/ASX 300 index. This includes the big four banks, along with dividend favourites such as Sydney Airport Holdings Pty Ltd (ASX: SYD) and Transurban Group (ASX: TCL). The ETF currently offers investors a decent dividend yield of approximately 4%.
And if you're looking for even more income then you would be hard pressed to find better options than these dividend shares.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.