Luckily for income investors in this low interest rate environment, the Australian share market is home to a large number of dividend-paying shares.
While not all of these will be paying dividends during the pandemic, three that look set to do so are listed below.
Here’s why I think they could be good options for income investors right now:
Coles Group Ltd (ASX: COL)
I think that Coles is one of the safest dividend shares to buy. This is because, as we have seen in recent months, we still need the staples during a crisis. In addition to this, thanks to its positive growth outlook, I believe Coles is well-positioned to increase its dividend consistently over the coming years regardless of economic conditions. In FY 2021 I estimate that its shares will provide investors with a fully franked dividend yield of ~4%.
Rural Funds Group (ASX: RFF)
Another safe option to consider is Rural Funds. It is an agriculture-focused property group with a diverse portfolio of assets across a number of industries such as cattle, vineyards, and orchards. I like the company due to the quality of its assets and their long term tenancies. In respect to the latter, at the end of the first half its weighted average lease expiry stood at 11.5 years. This gives investors a lot of visibility with its earnings and distributions. In FY 2021 the company intends to lift its distribution to 11.28 cents per share. This works out to be a forward 5.9% distribution yield.
Wesfarmers Ltd (ASX: WES)
A final dividend share to consider buying is Wesfarmers. I think the conglomerate is a good option due to the quality and positive outlook of its portfolio of businesses. In addition to this, the company has a sizeable cash balance that could be used for acquisitions that bolster its growth in the coming years. At present I estimate that its shares offer a fully franked forward 3.9% dividend yield.
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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended RURALFUNDS STAPLED. The Motley Fool Australia owns shares of COLESGROUP DEF SET and Wesfarmers Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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