Investment properties are seen as a safe asset to own. But, there are a number of S&P/ASX 300 Index (ASX: XKO) shares that have a lot of appeal.
Properties can have a number of issues, such as tenants not paying or tenant-caused damage. The property could need repairs like an oven, toilet, mould in the bathroom, a leaking roof or cracks in the wall.
I don't need to be the one managing that as a shareholder. That's for management to worry about.
In my view, the two ASX 300 shares below would make much better investments. So let's get into it.
Rural Funds Group (ASX: RFF)
We don't need to own property ourselves to gain exposure to property.
Rural Funds is one of my favourite real estate investment trusts (REITs) because of how it provides exposure to farmland, which I view as an integral sector in Australia.
The ASX 300 share owns a diversified agricultural portfolio across cattle, almonds, macadamias, vineyards and cropping. These farms are leased to high-quality tenants.
I like the diversification on offer, as well as its freedom to find the best opportunities in the sector.
The business has rental growth built into its contracts, with indexation linked to inflation or there are fixed annual increases. This helps support rental profits growth over time.
It's trading at a sizeable discount to its underlying value, the adjusted net asset value (NAV). It's 'adjusted' for the market value of the water entitlements that are leased to tenants.
It expects to pay a distribution of 11.73 cents per unit in FY26, translating into a forward distribution yield of approximately 6% at the time of writing.
Telstra Group Ltd (ASX: TLS)
Most households and businesses appear to put a very high value on their internet connection these days, meaning Telstra has very defensive earnings, in my view.
The business has a large market share in Australia, thanks to its reputation of having the best network in Australia. This has allowed it to implement price increases in the last few years, leading to higher profit margins.
Adding subscribers is also boosting the ASX 300 share's operating leverage because the fixed costs of the network are spread across more users.
I think its profit margins and bottom line will improve over the next few years, which can help fund larger dividend payments and push the Telstra share price higher.
I'm expecting the FY26 dividend payout to be larger, but using the payments from FY25 translates into a grossed-up dividend yield of 5.5%, including franking credits, at the time of writing.
