With the RBA cash rate at an all time low and looking very likely to go lower still, I take a look at 3 ASX shares that may prove a better alternative to your term deposit.

Sydney Airport Holdings Limited (ASX: SYD)

Sydney Airport operates one of Australia’s highest quality assets and as a result, is seen by investors as a reliable candidate for income investing needs. Although passenger numbers have declined slightly of late due to subdued economic conditions, the long term trends remain positive and with new services being added all the time, earnings are likely to be very robust.

The Sydney Airport share price has been a strong performer over the past several years and is currently trading not too far from its 12 month high. Based on the current price, shares are trading on a dividend yield of 4.6%.

The Rask Finance video below explains dividends:

National Australia Bank Ltd (ASX: NAB)

One of Australia’s big four banks, the NAB share price has been steadily rising this year as it tries to put the fallout from the Royal Commission behind it. With the appointment of Ross McEwan as CEO, shareholders will be hoping he can lead the bank into a new period of growth which will require regaining the trust of the Australian public.

Despite the many issues facing the banks including slowing credit growth and tighter controls, they remain extraordinary profit generating machines. Currently trading at just below $28, NAB shares are on a very healthy dividend yield of 6.6%.

Challenger Ltd (ASX: CGF)

The annuity provider is a clear market leader in an area that looks set to grow rapidly over the coming decade. Australia’s ageing population provides a natural tailwind that is likely to propel the company’s earnings upwards.

The fallout from the recent Royal Commission has had an impact on the financial advisers that recommend some of Challenger’s products. However, I think this is likely to be a temporary road bump. Demand for Challenger’s annuity products is very likely to grow over time as retirees who are living longer than ever aim to protect against longevity risk (the risk of running out of money before you kick the bucket).

It’s important to note that Challenger is also likely to have its task made easier by the fact that it’s in the Australian government’s best interests to have as many people as possible self funded in retirement, thus lessening the burden on the pension system. As a result, legislation passed in relation to Challenger and its products are more likely to be friendly in nature.

Which One Would I Buy?

This is a slightly tricky question as I already own shares in Challenger and am therefore likely to have a bias for picking its shares. That being said, if I were to add one of the other two companies I would pick Sydney Airport for its defensive earnings and my belief that interest rates will remain at historic lows for a number of years yet.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

At the time of publishing, Luke owns shares in Challenger Ltd.