While term deposit rates are improving, they still fall short of the yields that are on offer with some ASX 200 shares.
In fact, income investors will get a better return by investing in two ASX 200 bank shares ahead of their term deposit offerings.
In addition, unlike term deposits, they have the potential to generate big capital gains for investors as well.
Here's what you need to know:
ANZ Group Holdings Ltd (ASX: ANZ)
Citi believes that ANZ would be a great ASX 200 bank share to buy right now. This is because it sees ANZ's "unique capabilities as set to deliver relative outperformance in the current market conditions."
Importantly for income investors, the broker expects this to put ANZ in a position to offer generous dividend yields in the near term.
Citi is forecasting fully franked dividends of 164 cents per share in FY 2023 and then 166 cents per share in FY 2024. Based on the current ANZ share price of $24.17, this will mean yields of 6.8% and 6.85%, respectively.
The broker currently has a buy rating and a $27 price target on its shares.
National Australia Bank Ltd (ASX: NAB)
Another ASX 200 bank share that could be a buy for income investors in July is NAB.
That's the view of analysts at Goldman Sachs, which are positive on the company due to its exposure to commercial lending.
The broker highlights that it sees "volume momentum over the next 12 months as favouring commercial volumes over housing volumes, and we believe NAB provides the best exposure to this thematic."
As for income, Goldman is expecting fully franked dividends of $1.66 per share in both FY 2023 and FY 2024. Based on the current NAB share price of $26.68, this implies yields of 6.2% in both years.
Goldman Sachs has a buy rating and a $30.69 price target on its shares.
