Not surprisingly, with the two rate cuts late last year and an outlook of stable to lower rates for the current year, many investors are considering alternative ways to bolster their income.

However, one way to gain access to higher income is via Australian company share dividends. With cash rates at around 4.25% and current term deposit rates falling to around 5.5% – dividends are looking quite attractive. 

The table below provides a summary of some quality shares and their current forecast dividends.  Also shown is the income that could be generated via a $100,000 investment spread across these ten stocks.

The importance of dividend imputation credits cannot be overlooked, as many who live off their investment income do so via pensions from a Self Managed Superannuation Fund (SMSF).  As such, the SMSF receives the imputation credit as a cash tax refund each year . This bolsters the actual income generated by the investment and is represented as the Gross Yield in the table above.

One could argue that this portfolio of investments is not particularly diverse, and I would tend to agree as there is a large exposure to financials.  However the table below shows the current dividends payable on quality, low cost listed investment companies:

These companies offer a diverse exposure to the Australian share market, and their dividend payments are reliable.  The gross yield can be compared quite favourably to current term deposit interest rates.

While share investment can see your capital fluctuate as share prices move, the dividend income generated by quality companies tends to be generally predictable..

In addition, the general long term growth in dividends is also a positive factor to consider.

Rather than fleeing the share market for the perceived safety of fixed interest, investors seeking long term, reliable income have plenty to gain by keeping their focus on the share market.