Term deposits have long been a favoured option for Australians seeking a steady income stream. It’s easy to see the appeal: they offer predictable interest payments and the security of capital, making them a comfortable choice for more conservative investors. However, for those willing to venture into the share market, ASX dividend shares present a compelling alternative, offering not just income but also the potential for capital growth over the long term.
Naturally, investing in shares carries its own set of risks, and dividends are never a guaranteed return. Yet, for investors who can stomach a bit of market volatility, a closer look at certain ASX dividend shares might prove worthwhile, especially as we head into June.
Harvey Norman Holdings Ltd (ASX: HVN)
Harvey Norman, a household name in Australian retail, has been a fixture in the local market for decades. The company’s extensive range of furniture, bedding, electronics, appliances, and other household goods makes it a familiar presence in many homes. While challenging retail conditions, often exacerbated by rising interest rates and cautious consumer spending, can impact performance, Harvey Norman has a proven track record of navigating various economic cycles.
What truly sets Harvey Norman apart from many other retailers is its significant property portfolio. This substantial asset backing provides an additional layer of security and strengthens the company’s overall investment proposition. Looking ahead, Harvey Norman shares are anticipated to offer a dividend yield of approximately 6.75% in the 2027 financial year, a figure that could be attractive to income-focused investors.
HomeCo Daily Needs REIT (ASX: HDN)
Another ASX dividend opportunity worth considering is HomeCo Daily Needs REIT. This property trust specialises in convenience-based assets, meaning it owns properties that cater to everyday essentials. Its portfolio is diversified across daily needs centres, large-format retail outlets, health and services properties, and other locations focused on convenience.
This strategic focus differentiates HomeCo Daily Needs REIT from traditional shopping centre operators that might be more heavily reliant on discretionary spending like fashion or luxury goods. By housing tenants such as supermarkets, pharmacies, medical practitioners, childcare providers, and essential household goods retailers, the REIT benefits from a more resilient rental income base. This resilience can be particularly valuable during periods of economic uncertainty. For income investors, HomeCo Daily Needs REIT is projected to deliver a dividend yield of around 7% in FY2027.
Transurban Group (ASX: TCL)
For investors looking to diversify away from term deposits, Transurban Group presents a unique proposition. As a major toll road operator, Transurban manages critical transport infrastructure across Australia and North America. These toll roads are often irreplaceable assets and form vital components of urban transportation networks.
Transurban’s business model is intrinsically linked to long-term trends such as population growth, increasing urban congestion, and the essential nature of many travel routes. Furthermore, its revenue streams are often bolstered by contracted toll increases across various sections of its network. While the projected dividend yield for Transurban shares in FY2027 is around 4.15%, its defensive qualities and exposure to essential infrastructure may appeal to certain investors.
These three ASX-listed entities represent different sectors but share a common thread of offering potential income streams that could rival or even surpass traditional term deposits, while also presenting opportunities for capital appreciation. As always, thorough research and understanding of individual risk tolerance are paramount before making any investment decisions.
