With record low-interest rates and signs that the Reserve Bank of Australia intends to cut rates further in 2019, it is a bleak time for fixed-interest investors and anyone holding a significant quantity of their wealth in cash (a dry July indeed). Dividend paying shares have surged in value over recent months as investors chase yield in equities and real estate investment trusts. It seems investors are willing to pay higher and higher prices just to see a healthy dividend yield from their cash at these times.
These factors do invite caution, but we still have to get yield from somewhere. Here are 3 ASX dividend paying shares I would buy for income this July.
National Australia Bank Ltd (ASX: NAB)
Although NAB recently cut its dividend by 16%, it is still the fattest dividend out of the ASX banks and one of the largest on the ASX. Therefore, NAB makes a good candidate for portfolio income and we can be sure that the dividend isn't under any pressure in the short-term at least. NAB is currently yielding 6.81% or 9.72% if you include franking credits, which is too good to pass up (in my opinion) in this low-rate environment.
WAM Research Limited (ASX: WAX)
WAX is one of the smaller LICs (Listed Investment Companies) in the WAM stable, but also one of the most impressive. WAX has delivered a return of 16.4% since 2010, outperforming its benchmark by over 7%. WAX also boasts a healthy, fully-franked dividend yield of 7.2% (or 10.23% grossed-up), making it an extremely lucrative income stock. Although WAX has underperformed more recently, I think its current portfolio has the potential to regain some of this performance. Investors are still happy to pay a hefty premium for WAX shares, however, so this should also factor into a buying decision at this time.
SPDR MSCI Australia Select High Dividend Yield Fund (ASX: SYI)
SYI is an ETF (or exchange-traded fund) that only invests in the highest-yielding shares on the ASX. I like SYI because of the large number of high-yielding holdings you can get under a single share for a cheap price (0.35% per annum). This ETF pays distributions quarterly and currently has 41 holdings, including Westpac Banking Corp (ASX: WBC), Wesfarmers Ltd (ASX: WES) and Rio Tinto Ltd (ASX: RIO). SYI is currently yielding 5.52% and 7.54% including franking credits.
Foolish Takeaway
In these low-rate, trying times it pays to look at all options in order to find good quality, income-producing assets. All of these shares will give you that (in my opinion) and would be worthy of consideration in any income-orientated portfolio this July.
