Term deposits are a popular option with income seekers.
It isn't hard to understand why. They can offer predictable interest payments and capital stability, which can be useful for conservative investors.
But ASX dividend shares can offer something term deposits cannot: the potential for growing income and capital growth over time.
There are risks, of course, and dividends are never guaranteed. But for investors comfortable with share market volatility, the three ASX dividend shares below could be worth a closer look.
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Harvey Norman Holdings Ltd (ASX: HVN)
The first ASX dividend share to look at is Harvey Norman.
The retail giant has been part of the Australian market for decades and remains one of the country's best-known consumer brands. Its stores sell furniture, bedding, electronics, appliances, and other household products.
Retail conditions can be tough when interest rates are high and households are watching their spending. But Harvey Norman has been through plenty of cycles before.
The company also has something that sets it apart from many retailers: a large property portfolio. This gives the business another layer of asset backing and adds depth to the investment case.
Harvey Norman shares are expected to offer a 6.75% dividend yield in FY 2027.
HomeCo Daily Needs REIT (ASX: HDN)
Another ASX dividend share that could be worth a look is HomeCo Daily Needs REIT.
This property trust owns convenience-based assets focused on the things people use regularly. Its portfolio includes daily needs centres, large-format retail, health and services properties, and other convenience-focused locations.
This gives it a different profile from shopping centres that rely heavily on fashion, luxury goods, or discretionary spending.
Tenants such as supermarkets, pharmacies, medical services, childcare operators, and household goods retailers can provide a more resilient rental base. That can be useful when the economic outlook is uncertain.
HomeCo Daily Needs REIT is expected to provide income investors with a 7% dividend yield in FY 2027.
Transurban Group (ASX: TCL)
A final ASX dividend share to consider instead of term deposits is Transurban.
The toll road operator owns major transport assets in Australia and North America. These roads are hard to replicate and often form critical parts of city transport networks.
This gives Transurban exposure to long-term population growth, urban congestion, and essential travel routes. Revenue can also be supported by contracted toll increases across parts of its network.
A 4.15% dividend yield is expected from Transurban shares in FY 2027.
