With interest rates at record lows and unlikely to improve any time soon, I believe investors are better off skipping supposed high interest savings accounts and investing in the share market.
The All Ordinaries (Index: ^AXAO) (ASX: XAO) is home to a number of high quality shares which pay generous dividends to their shareholders.
Three which I think are worth considering today are as follows:
Mantra Group Ltd (ASX: MTR)
With its shares down by a third in the last 12 months due the underperformance of this accommodation provider's CBD portfolio, they currently provide a trailing fully franked 3.6% dividend. Whilst this isn't the biggest yield on the market, I believe it has significant room to grow over the next decade thanks to the Australian tourism boom. As demand for its rooms increase, I expect to see improved occupancy levels and room rates result in strong earnings growth.
Retail Food Group Limited (ASX: RFG)
Retail Food Group is the master franchisor of popular brands such as Gloria Jean's and Donut King and provides investors with a market-beating trailing fully franked 5.6% dividend. One thing in particular that I like about the company is its history of dividend increases. Retail Food Group has increased its dividend each year for over a decade and looks likely to do the same this year. Another key reason I like the company is its international expansion plans. So far its international operations have performed well, most recently posting a 10.1% increase in half-year segment EBITDA.
Sigma Pharmaceutical Limited (ASX: SIP)
Sigma Pharmaceutical is the company behind pharmacy chain brands including Chemist King, Guardian, and Amcal. In March Sigma reported a solid 13% jump in underlying full-year net profit after tax. This bottom line growth allowed the company to increase its full-year dividend by 10% to 5.5 cents per share. Based on the current share price this equates to a trailing fully franked 4.4% dividend. Thanks partly to the launch of its Chinese Amcal online store, I expect the company to continue growing earnings in the double-digits in FY 2017. This will potentially allow Sigma to increase to its generous dividend even further. For this reason I think it is a good investment option today.
