Forget term deposits and buy these ASX dividend shares

These dividend shares could be great additions to a balanced income portfolio.

| More on:
Middle age caucasian man smiling confident drinking coffee at home.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

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:

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.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended The Lottery Corporation. The Motley Fool Australia has positions in and has recommended Amcor Plc and Harvey Norman. The Motley Fool Australia has recommended The Lottery Corporation. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Dividend Investing

Increasing stack of blue chips with a rising red arrow.
Blue Chip Shares

2 ASX blue-chip shares offering big dividend yields

I’m backing these two businesses as appealing dividend stocks.

Read more »

A happy, smiling man stretches out among yellow daisies in the green grass, dreaming of success.
Share Market News

How I'd invest monthly savings to generate over $50,000 passive income

This is how modest monthly investing could turn into serious passive income.

Read more »

Woman on a swing at a beach, symbolising passive income.
Dividend Investing

Passive income: How to earn safe dividends with just $20,000

The best dividend stocks tend to share these traits...

Read more »

Man holding out $50 and $100 notes in his hands, symbolising ex dividend.
Dividend Investing

Own VTS ETF? It's a great day for you!

This exchange-traded fund seeks to mirror the performance of the entire US stock market.

Read more »

A man looks at his laptop waiting in anticipation.
Dividend Investing

A 3.5% ASX dividend stock paying cash every month

Some monthly divided stocks are more equal than others.

Read more »

A man smiles as he holds bank notes in front of a laptop.
Dividend Investing

3 of the best ASX dividend stocks to buy now

Let's see which dividend stocks analysts are tipping as buys.

Read more »

Close-up of a business man's hand stacking gold coins into piles on a desktop.
Dividend Investing

3 great ASX dividend shares to buy in 2026

These are the types of dividend investments that Australians should look at.

Read more »

Happy young woman saving money in a piggy bank.
Dividend Investing

2 ASX income stocks with 6% dividend yields I would buy

High yields only matter if the income can be maintained. These two ASX stocks offer visible cash flows and dependable…

Read more »