According to the latest ASX 30 Day Interbank Cash Rate Futures contract, there is now a 67% probability of a cash rate decrease to 1.25% at the next RBA board meeting on May 7.
Just a day earlier the market had priced in a probability of 13%, but this week’s disappointing inflation data appears to have convinced many in the market that the central bank will be forced to make a move next month.
Unfortunately for savers, I think this is the first of two cash rate cuts in 2019, ultimately bringing rates down to a lowly 1%. Which is likely to mean it will be many years before rates return to normal levels again.
In light of this, I would suggest investors look to the share market for a source of income. After all, there are a large number of shares offering investors generous dividend yields.
Three which I would buy today are listed below:
Aventus Retail Property Fund (ASX: AVN)
Aventus Retail Property Fund is a fully integrated owner, manager, and developer of large format retail centres across Australia. It counts many of the biggest retailers in the country as tenants, which I believe lowers the risk of rent defaults and closures. I expect this to allow Aventus to continue growing its funds from operations and distributions over the coming years. Its units currently offer a trailing 7.25% yield.
Coles Group Ltd (ASX: COL)
I think that this supermarket giant could be a great option for income investors. This is because Coles has plans to pay out between 80% and 90% of its earnings as dividends in the future. I estimate that this means its shares provide investors with a fully franked forward 4.6% dividend at present. The good news is that I believe the company is well-positioned to grow this dividend at a solid rate over the next decade thanks to its investment in automation. This is expected to boost the supermarket’s margins materially over the coming years.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
I think the operator of Sydney Airport would be a great option for investors in search of income. Due to increasing global tourism, its position as the main gateway into and out of Australia, and its near-monopoly status, I believe it is well-placed to grow its profit per passenger at a solid rate over the next decade. I expect this to allow the Sydney Airport board to continue increasing its dividend at a decent pace for many years to come. At present Sydney Airport’s shares offer a trailing 4.9% dividend yield.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended COLESGROUP DEF SET and Sydney Airport Holdings Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019