3 industrial stocks for yield

Financial journalist and commentator on 3AW and Sky Business
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Investors living off income are tearing their hair out – just when they thought rates could hardly go lower, the Reserve Bank of Australia (RBA) is being urged to cut the official cash rate from the current record low of 0.75%, to 0.5%, as early as its meeting in February.

With the average term deposit interest rate across all terms currently sitting below 1.4% per annum, and older deposits maturing, it is a frightening time for income-oriented investors – and little wonder that they are effectively forced into the share market for dividend yield, for which they often incur significant capital risk.

Thomson Reuters says the stock market’s average expected yield is 2.765% in FY20, equivalent to 3.95% when grossed-up; and 2.8% in FY21, grossed-up to 4%. And investors have come to expect a lot better than that, particularly in the banks.

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