The current interest environment makes it very difficult to generate a meaningful return on cash in the bank, fixed interest or bonds. Getting a positive cashflow from a residential property is also very difficult when the gross yield is often below 3%.
I think the only way to generate decent income these days is with shares. Here are three options that tick the income box:
WAM Capital Limited (ASX: WAM)
WAM Capital is the largest listed investment company (LIC) run by Wilson Asset Management and is also the longest-running of its stable of LICs.
It has an impressive history of outperformance, its portfolio has generated an average return of 17.7% per annum since inception and 16.2% over the past five years, before fees.
Management like to pay out a lot of this profit as a fully franked growing dividend, which is why it's an attractive option for investors.
It currently has a grossed-up dividend yield of 8.75%.
NAOS Absolute Opportunities Co Ltd (ASX: NAC)
Naos Absolute Opportunities is another LIC, but this one is operated by the Naos investment team. It's a much younger LIC compared to WAM Capital, but it also has an impressive performance since inception.
It has generated an average return per annum of 18.5% since inception and 19.34% per annum over the past three years.
This LIC usually has a much smaller number of positions compared to other LICs, which gives it the ability to identify long-term growth opportunities and only hold its best ideas.
It's currently trading with a grossed-up dividend yield of 7.32%.
National Storage REIT (ASX: NSR)
National Storage is the largest self-storage operator in Australia. There is a growing demand for storage units as residential real estate prices per square metre grow more expensive every year.
The real estate investment trust's (REIT) management are executing the strategy well and this is leading to economies of scale benefits flowing to profit margins.
National Storage is steadily expanding through acquisitions and is growing the distribution and underlying earnings per share at a good rate each year.
It's currently trading with a distribution yield of 6.24%.
Foolish takeaway
At the current prices and yields it's hard to look beyond WAM Capital as a leading income choice on the ASX with its record of increasing its dividend every year since the GFC.
