Australian Real Estate Investment Trusts (A-REITs) are I think a commonly overlooked method of delivering high yields and modest growth.
Despite a mad investor rush last year to get out of term deposits and into the market, a cursory search will still find a number of shares yielding over 6%.
Many of these are property trusts, and a good portion of those are close to their Net Tangible Assets (NTA) value which provides a sense of tangibility and security to your investment.
Although REITs generally deliver slower earnings growth than other business models, they can deliver high amounts of cash and solid capital gains as the value of properties in their portfolio rises.
However you'll have to be quick, because the 98% acquisition of Australand Property Group (ASX: ALZ) by Frasers Centrepoint Ltd (SGX: TQ5) is sure to leave a lot of cashed up investors looking for property shares!
Scentre Group (ASX: SCG) for instance, is forecast to deliver a 6% dividend this year.
Although the company trades at a 20% premium to NTA, this is inevitable owing to its blue-chip status and high investor awareness. However, the company continues to represent good value at current prices.
Galileo Japan Trust (ASX: GJT) paid dividends of 10.5 cents per share in 2014, equating to a yield of just over 6.1%.
Although perhaps riskier than Scentre Group, Galileo is trading at a discount of 20% to its NTA and offers pure Japanese currency exposure for investors looking to hedge against a falling Aussie dollar.
Cromwell Property Group (ASX: CMW) pays an astonishing 1.9% every three months (7.5% total!) at today's prices and to my mind is the best income stock on the ASX – if investors can stomach the higher risk and gearing levels of 42%.
Cromwell also trades at a 34% premium to NTA which should come as no surprise given its fantastic dividends.
Last but not least, Abacus Property Group (ASX: ABP) pays a forecast dividend of approximately 6.8% at today's prices and trades at around a 20% premium to NTA with gearing of 23%.
A little riskier than Scentre Group but safer than Cromwell and Galileo, Abacus is a solid bet for any investor looking to replace Australand.
However any article on dividend shares is not complete without mentioning The Motley Fool's Top Dividend Stock for 2014-2015 which can compete on its own merits.
Although its dividend is not as appealing (yet!) as these four property stocks, The Fool's top analyst Scott Phillips has identified a company with much faster growth prospects; meaning a purchase today could see you with a proportionally greater dividend in a few years' time.
Better yet, it's sure to be followed by a rising share price as the market twigs to its potential.
It's a company I already own shares in, and one I think you might be interested in as well.
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