The income you can get by leaving money in the bank is pretty bad these days. It's crazy to think that with a million dollars in the bank the most you might be able to get is $30,000, with most accounts offering less of a return than that.
So, what should an income-seeking investor do?
I think Australian shares are the answer. Many experts agree that, on the income side of things, Australia investments are hard to match for the income they can produce.
Here are three dividend shares I own in my portfolio:
WAM Capital Limited (ASX: WAM)
WAM Capital is the biggest listed investment company (LIC) run by Wilson Asset Management. It operates very differently to other LICs of a similar size, WAM Capital is completely index unaware. That means it only invests in the shares it thinks are the best growth opportunities, not just along the lines of how big companies are.
The LIC has soundly beaten its benchmark over the long-term whilst keeping a good amount of cash on hand for protection and opportunities. It pays out a lot of its growing profit as a dividend.
It has increased its dividend each year since the GFC and currently has a grossed-up dividend yield of 8.75%.
Rural Funds Group (ASX: RFF)
Rural Funds is Australia's only pure-agricultural real estate investment trust (REIT). I think it's one of the best REITs because it has rental indexation increases built into all of its contracts, either CPI or fixed increases, with quality tenants like Treasury Wine Estates Ltd (ASX: TWE) and Select Harvests Limited (ASX: SHV).
Management have a target of increasing the distribution by at least 4% each year, which is a good amount above the inflation rate.
Rural Funds is currently trading with a distribution yield of 4.42%.
Arena REIT No 1 (ASX: ARF)
Arena is another REIT that I own in my portfolio. This one mostly invests in childcare buildings but it also has a few medical buildings that it leases to Primary Health Care Limited (ASX: PRY).
Childcare is a growing industry with Australia's very-high level of births each year, as well as the high immigration level.
Arena has increased its distribution and earnings each year for a number of years and it shouldn't stop any time soon with consistent rental price increases and growing property values.
Arena is currently trading with a distribution yield of 5.69%.
Foolish takeaway
All three look like good income options at the current prices. However, if I had to choose one it would be WAM Capital because it has a higher dividend yield and it's the least likely to be affected by rising interest rates.
