As much as I would love to see the cash rate increase in the near term, I think it is very unlikely to happen this year and suspect it could be late 2020 before inflation will be at a level that allows the Reserve Bank to make a move.
The good news is that the Australian share market has plenty of options for savers and income investors that smash the interest rates on offer from savings accounts and term deposits.
Three that I think are worth considering are listed below:
Australia and New Zealand Banking Group (ASX: ANZ)
At present ANZ Bank's online saver account offers an interest rate of just 0.5% once the introductory rate ends after three months. This rate is lower than inflation, meaning your savings are actually dwindling by being in this account. Because of this, I would much rather be invested in ANZ Bank's shares which offer a trailing fully franked 6.2% dividend yield. Though, with the Royal Commission final report due at the end of next week, it may be best to hold off until this has been released.
Rural Funds Group (ASX: RFF)
Rural Funds is a real estate property trust which owns a growing portfolio of income generating rural properties across different geographies and industries. As these properties have long-term tenancy agreements and rental indexation built into them, I believe Rural Funds is in a great position to continue increasing its distribution at a solid and predictable rate. Its units currently offer a trailing 4.7% yield.
Super Retail Group Ltd (ASX: SUL)
I think that this retail group could be a great option for income investors in this low interest rate environment. The company behind brands including Super Cheap Auto, Rebel, and Macpac has seen its shares take a big hit over the last few months due to consumer spending concerns and the departure of its CEO. I think this selloff has been severely overdone, so with its shares trading at a little over 9x earnings and offering a trailing fully franked 6.8% dividend, now could be a great time to invest.
