If you’re looking to beat low interest rates with dividend shares, then I think the three listed below would be top options.
Here’s why I think they would be good options for income investors right now:
Coles Group Ltd (ASX: COL)
The first dividend share I would buy is this supermarket giant. I think Coles is a top option due to its defensive qualities and positive long term growth outlook. Combined with its cost cutting plans, I believe Coles is well-placed to grow its earnings and dividends at a solid rate over the next decade. Another positive is its favourable dividend policy of returning upwards of 90% of its earnings to shareholders. Based on this, I expect its shares to provide investors with a fully franked dividend yield of 4.1% in FY 2021.
Rural Funds Group (ASX: RFF)
Another dividend share to consider buying is Rural Funds. It is a property company that owns a diversified portfolio of high quality Australian agricultural assets that are leased to experienced agricultural operators. It generates its revenue from long-term leases across five sectors: almond orchards, cattle assets, vineyards, cotton assets, and macadamia orchards. Due to its lengthy tenancy agreements, Rural Funds has good visibility with its earnings. This means it has been able to provide guidance for the next couple of years. It plans to pay distributions of 10.85 cents per share in FY 2020 and then 11.28 cents per share in FY 2021. This equates to yields of 5.85% and 6.1%, respectively.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final option for income investors to consider buying is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a top option for investors that don’t have enough funds to diversify their portfolio effectively. This is because it provides investors with exposure to many of the highest yielding blue chip shares on the ASX through a single investment. At present I estimate that its units provide a forward dividend yield of ~4.5%.
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More reading
- 3 super strong ASX 200 blue chip shares to buy right now
- Wesfarmers share price lower after announcing major Target overhaul
- ASX retail stocks facing new billion-dollar earnings scare during COVID-19 recovery
- 3 ASX retail shares to own for the next 20 years
- Is the Wesfarmers share price in the buy zone?
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. 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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