While interest rates are expected to edge higher this year, it could be some time before term deposits are once again looking attractive for income-focused investors.
And although they offer certainty, the returns are often eroded by inflation, meaning your purchasing power can quietly go backwards.
That's why many investors turn to ASX dividend shares instead.
But which shares could be good alternatives? Let's take a look at three that could form part of a balanced income portfolio:
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Amcor plc (ASX: AMC)
Amcor is one of the world's largest packaging companies, supplying flexible and rigid packaging solutions to consumer staples, healthcare, and beverage businesses across the globe. Its products are used every day, which gives the company highly defensive earnings characteristics.
This stability underpins Amcor's ability to pay consistent dividends through economic cycles. Demand for packaging doesn't disappear in a downturn, and long-term contracts with major global customers help smooth cash flows. The recent merger with Berry has created a juggernaut in the industry, positioning it for growth over the remainder of the decade.
Consensus estimates show that the market expects dividend yields of 6.1% in FY 2026 and then 6.3% in FY 2027.
Harvey Norman Holdings Ltd (ASX: HVN)
Harvey Norman is of course one of Australia's largest retailers with a growing global store network. In addition to its retail operations, the company owns a valuable property portfolio, which adds another layer of income stability.
While retail can be cyclical, Harvey Norman has a long history of outperforming and rewarding its shareholders with attractive dividends. This was no exception in FY 2025, with Harvey Norman delivering results despite many retailers struggling.
The market expects this trend to continue and is forecasting fully franked dividend yields of 4.5% in FY 2026 and 5.1% in FY 2027.
The Lottery Corporation Ltd (ASX: TLC)
Finally, The Lottery Corporation could be an ASX dividend stock to buy. It is a pure-play lotteries business with exclusive long-term licences across Australia. This gives it a rare combination of predictable revenue, limited competition, and high margins.
Lottery ticket sales tend to be resilient regardless of economic conditions, making The Lottery Corporation's cash flows highly dependable. That reliability supports consistent dividend payments, which are particularly attractive for conservative income investors. Unlike term deposits, it also offers the possibility of dividend growth over time as jackpots increase and digital sales expand.
The consensus estimate shows that the market expects dividend yields of 3.5% in FY 2025 and then 4% in FY 2026.
