Australia Markets close in 5 hrs 12 mins

3 high-yield dividend shares for your retirement portfolio

James Mickleboro

With interest rates at a record low and potentially staying that way for the whole of 2018, I believe that investors would be better off skipping savings accounts and term deposits in favour of some of the high yielding dividend shares on the local share market.

Here are three dividend shares which I think are great options for a retirement portfolio:

Super Retail Group Ltd (ASX: SUL)

Whilst I would suggest holding off an investment in Super Retail until after the release of its half-year result on February 20, if the result and its outlook are positive then I think Super Retail could be a great option for income investors. One thing in particular that I will be looking out for in that result is the impact that Amazon’s arrival in Australia is having on its business. I’m optimistic that the impact has been negligible and Super Retail remains positioned for growth. At present Super Retail’s shares provide a trailing fully franked 5.6% dividend.

Telstra Corporation Ltd (ASX: TLS)

This telco giant’s shares have fallen significantly over the last 12 months after it was forced to cut its dividend to 22 cents per share in FY 2018 in order to free up funds to reinvest in its business. Whilst the cut was a disappointment, I believe it was a necessary evil. The good news is that I think this dividend is sustainable for at least the next couple of years, after which a lot will depend on the success of its investments and cost controls. This 22 cents per share dividend equates to a fully franked 6.3% yield.

Westpac Banking Corp (ASX: WBC)

I think that Australia’s oldest bank is a great option for income investors due to the winning combination of value and yield its shares offer. According to a recent note out of Macquarie, its equity analysts expect Westpac to pay a fully franked $1.99 per share dividend in FY 2018, which equates to a 6.6% yield based on its last close price. Furthermore, the broker has a $35.00 price target on its shares, implying potential upside of almost 16% for its share price. Combined, this is a total potential return of approximately 22.5% over the next 12 months. I agree with Macquarie’s view and believe Westpac is the best option in the banking sector at the moment.

More reading

Motley Fool contributor James Mickleboro owns shares of Westpac Banking. The Motley Fool Australia owns shares of and has recommended Telstra Limited. The Motley Fool Australia owns shares of Super Retail Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.