Vocus Group Ltd (ASX: VOC) shares, Woolworths Limited (ASX: WOW) shares and Dicker Data Ltd (ASX: DDR) shares pay fully franked dividends to shareholders.
Are share dividends riskier than term deposits?
Currently, term deposits from most Australian banks are offering returns of around 2.5% per year. It's important to remember that the 2.5% return is before tax and inflation (currently 1.5%).
Adjusting for inflation and tax, many term deposits could be returning less than 1%. Ouch!
However, it's also important to consider risk. Term deposits are low risk. What's more, some Australian term deposits and savings accounts come with the 'Government Guarantee', which covers up to $250,000 per person per bank. You should check with your bank to see if you are covered, in the unlikely event that the bank goes out of business.
In stark contrast we have shares. Potentially, quality dividend-paying shares can offer a far superior return to investors. What's more, dividends can carry a 'tax benefit' called franking credits, which can ultimately boost your after-tax income.
Here are three shares you might consider watching in April:
1. Woolworths. Woolies is one of Australia's leading supermarket operators. It also owns Big W and Dan Murphy's. The company recently sold off its Masters and Home Timber and Hardware operations, which proved to be somewhat of a disaster. However, the supermarkets business could be on the mend.
Woolworths is tipped to pay a 3% fully franked dividend. That grosses up to a comparable dividend of 4.3% with the franking credits.
2. Vocus Group. Vocus is the owner of Dodo, iPrimus, Commander and much more. It also has an extensive corporate suite of brands and owns a significant fibre network backbone. The company's recent takeovers of M2 Group, Amcom and NextGen could provide a boost to the company's profits over the next two years. However, it does come with its fair share of risks. It is forecast to pay a 3.4% fully franked dividend.
3. Dicker Data. Dicker Data is a founder-run business that distributes IT equipment throughout Australia. Pleasingly, the company pays a quarterly dividend to shareholders. It has set guidance for its dividend to an equivalent fully franked annual dividend yield of 7.1%. Including the benefit of the franking credits for eligible shareholders, its dividend yield increases to around 10%. Like Vocus, there are risks to an investment in Dicker Data. Indeed, it is a small company by the ASX's standards.
Foolish Takeaway
Term deposits could be as close to a guaranteed return as you'll find, in my opinion. However, if you are investing for more than three years and have built up a healthy cash balance and 'emergency' account for living expenses, the sharemarket is one place you should consider putting your money.
