Although the odds of a rate cut at the Australian Central Bank meeting in August are reasonably limited, I think it is inevitable that the central bank will cut rates again by the end of the year.
This would be bad news for anyone experiencing income generated by time deposits.
At present a 60-month term deposit from Commonwealth Bank of Australia (ASX: CBA) currently It provides an annual interest rate of 1.8% for funds over $ 50,000.
If the liquidity rate goes down again, this rate could get closer to 1.5%, which is just keeping pace with inflation.
In light of this, I think that income investors should consider replacing term deposits with these quality dividend shares:
Coles Group Ltd (ASX: COL)
I think this supermarket giant can be a good substitute for a time deposit. This is due to the defensive qualities of the company, its strong market position, its cost reduction goals and its favorable dividend policy. Compared to this last, Coles intends to distribute to shareholders 80-90% of its profits every year. I believe that this means that at present his shares provide a 4% advance in dividend yields that is fully pre-paid and fully paid.
Scentre Group (ASX: SCG)
Scentre Group is the owner of the Westfield properties in the ANZ region. Its properties attract hundreds of millions of visits each year, which is unsurprisingly led to strong demand for leases from retailers. At its latest update, the company registered a 99.3% sky occupancy rate. I believe this has positioned itself well to carry out its plan to pay a 22.6 cents per security distribution this year, which currently amounts to a 5.7% yield.
Stockland Corporation Ltd (ASX: SGP)
Stockland is a diversified Australian owned company that owns, manages and develops shopping centers, residential complexes, industrial areas and pension villages. This year Stockland plans to increase its FFO for safety by ~ 5%. In light of this, it recently declared a final distribution of 14.1 cents per security, which brought the distribution of the entire year to 27.6 cents per security. This means that its shares currently offer income investors a final return on distribution of 6%.
And here are three other income shares that could be excellent alternatives to time deposits.
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Motley Fool collaborator James Mickleboro has no position in any of the stocks mentioned. Motley Fool Australia recommended Scentre Group. We Fools may not all have the same opinions, but we are all convinced that, considering a wide range of insights, we have become better investors. The Motley Fool has a disclosure policy. This article contains only general investment recommendations (with AFSL 400691). Authorized by Scott Phillips.
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