When it comes to generating an income stream from your investment dollar, most people tend not to think of shares as an attractive option, and this is a great pity. After all, shares can provide you with a regular and reliable income stream that not only outperforms all other asset classes, but also offers you fantastic tax benefits as well.
Because of this reason, I would be the last to argue that income investors should choose shares over high yielding savings accounts or term deposits in the short to medium term. But the situation changes dramatically over the longer term.
For starters, companies tend to increase their dividends each year as they grow their earnings. Indeed, of all the major Australian blue chip companies, virtually all have increased their dividends significantly over the past 10 years. What may surprise many people is that even during the current market downturn, most of the blue chip stocks have maintained or even increased their dividends!