It looks like Australians are unlikely to see a lift to cash rates until at least 2018, which means many people will understandably look to the share market to gain higher returns on their investments.
Some of the best shares to buy for income are those that offer fully franked dividends as a tax effective way of making your income that little bit juicier.
Of course it's no use buying shares for income if the value of your capital falls further than the income you receive though, so it's critical that investors look to buy companies that are able to grow their earnings and dividends over time.
Below I have three companies that investors could consider for income and hopefully a little capital growth.
Challenger Ltd (ASX: CGF) is the annuities provider that has an impressive record of growing its dividends and earnings. It has a strong competitive position and continues to deliver strong growth in annuities in part thanks to the growing underlying demand for the products from Australia's income-seeking baby boomer generation. At $11.70 the stock also looks on a reasonable valuation with a fully franked 3% yield.
JB Hi-Fi Limited (ASX: JBH) is the electronics good retailer that continues to deliver impressive results and a bumper dividend yield. It posted $1.16 in earnings per share for H1 2017, which does include the Christmas period, but still looks a strong result. Moreover, the stock changes hands for $27.28 on a low multiple of earnings for a business that has been growing at very strong rates. It should deliver investors a fully franked yield of around 4.4% over the year ahead with a reasonable outlook despite the potential arrival of Amazon.
Magellan Financial Group Ltd (ASX: MFG) is a well run international equities manager that recently grew its net profit before performance fees by 9%. The performance fees plunged as the group's funds underperformed their benchmarks in part because the mining boom of 2016 disadvantaged investors like Magellan who don't chase mining stocks. The stock offers a fully franked 3.3% trailing yield and I expect it shoud deliver investors a reasonable mix of income and growth over the medium term.
