Although the interest rates on offer from term deposits are the best they have been in years, they still pale in comparison to what you can find on the Australian share market.
In addition, with inflation potentially under control, interest rates are being tipped to go lower soon. This could mean we are seeing a peak for term deposit rates.
As a result, it could be worth considering the ASX dividend shares listed below as alternatives if your risk profile allows. Here's what sort of dividend yields you can expect from them according to analysts:
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Centuria Industrial REIT (ASX: CIP)
Centuria Industrial could be a good option for income investors. It is Australia's largest domestic pure play industrial property investment company.
UBS is currently tipping its shares as a buy with a $3.50 price target.
As for income, the broker is forecasting dividends per share of 16 cents in both FY 2024 and in FY 2025. Based on the current Centuria Industrial share price of $3.15, this represents dividend yields of 5.1% in both years.
IPH Ltd (ASX: IPH)
Another ASX dividend share to look at is IPH. It is an intellectual property (IP) services company with operations across the world.
Goldman Sachs is a fan of the company and has a buy rating and $8.70 price target on its shares. It believes that IPH is "well-placed to deliver consistent and defensive earnings with modest overall organic growth."
The broker expects this to underpin fully franked dividends of 34 cents per share in FY 2024 and then 37 cents per share in FY 2025. Based on the current IPH share price of $6.05, this represents dividend yields of 5.6% and 6.1%, respectively.
Telstra Group Ltd (ASX: TLS)
Finally, a third ASX dividend share that could be a good alternative to term deposits is Telstra. It is of course Australia's largest telecommunication company.
Goldman Sachs is also feeling bullish about Telstra and is tipping its shares as a buy with a $4.30 price target. In response to a recent update, the broker noted that "(1) mobile market rationality remains (particularly when combined with the recent Optus increase); (2) TLS mobile earnings growth remains strong, driven by subscribers and ARPU."
Goldman expects this to allow Telstra to pay fully franked dividends of 18 cents per share in FY 2024 and then 19 cents per share in FY 2025. Based on the current Telstra share price of $3.92, this equates to yields of 4.6% and 4.8%, respectively.
