The interest rates on offer with term deposits have started to fall and could continue to do so over the remainder of 2025.
In light of this, investors may want to focus more on ASX 200 dividend stocks instead of term deposits for an income boost.
But which stocks could be good alternatives right now? Let's take a look at a couple to consider:
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Harvey Norman Holdings Limited (ASX: HVN)
The first ASX 200 dividend stock to consider as an alternative to term deposits is Harvey Norman.
It is of course a retail giant that operates a network of company-owned and franchised stores across Australia and internationally, selling household goods, electronics, and furniture.
Bell Potter is a big fan of the company and has just tipped its shares as a buy. It commented:
We see HVN trading attractively at ~15x on a 1-year forward basis with multiple catalysts near/midterm such as improving sales trends in key markets assisted by a sizable upside from the AI driven upgrade cycle/replacement & spend shift to tech, gaining penetration in targeted regions in the UK in addition to the incremental earnings opportunities in its Property division as Australia's largest single owner with a $4.4b global portfolio.
As for income, Bell Potter is now forecasting fully franked dividends of 25.4 cents per share in FY 2025, 28.1 cents per share in FY 2026, and then 30.9 cents per share in FY 2027. Based on the current Harvey Norman share price of $5.44, this equates to attractive dividend yields of 4.7%, 5.15%, and 5.7%, respectively.
The broker has a buy rating and $6.00 price target on its shares.
Telstra Group Ltd (ASX: TLS)
Another quality ASX 200 dividend stock to consider instead of a term deposit is Telstra.
It is of course Australia's leading telecommunications company with 24.6 million mobile services and millions of broadband services.
The team at Goldman Sachs thinks the company would be a good option due to its defensive qualities and low risk earnings growth. It said:
We believe the low risk earnings (and dividend) growth that Telstra is delivering across FY22-25, underpinned through its mobile business, is attractive. We also believe that Telstra has a meaningful medium term opportunity to crystallise value through commencing the process to monetize its InfraCo Fixed assets – which we estimate could be worth between A$22-33bn.
In respect to dividends, the broker expects fully franked payouts of 19 cents per share in FY 2025, 20 cents per share in FY 2026, and 21 cents per share in FY 2027. Based on the current Telstra share price of $4.22, this equates to dividend yields of 4.5%, 4.7%, and 5%, respectively.
Goldman has a buy rating and $4.50 price target on its shares.
