Fortunately in this low interest rate environment, there are a lot of dividend shares for investors to choose from on the Australian share market.
Three which I think would be good long term options are listed below. Here’s why I would buy them:
Commonwealth Bank of Australia (ASX: CBA)
The Commonwealth Bank share price has come under a lot of pressure this year due to concerns that it might experience a spike in bad debts from the pandemic. While this is a real possibility, based on how quickly Australia is reopening, I believe the provisions it has taken will be more than enough. In light of this, I am optimistic the worst is behind the bank and now could be a good time to invest. Especially given the generous dividend yield its shares offer. I estimate that it will pay a $3.70 per share dividend in FY 2021. This equates to a forward dividend yield of 6.3%.
Sydney Airport Holdings Pty Ltd (ASX: SYD)
If you’re not in need of income immediately, then it could be worth considering a patient investment in this airport operator’s shares. Times are certainly hard for the airport operator, but it won’t be long until a growing number of travellers are passing through its terminals again. According to a recent note out of Goldman Sachs, it expects Sydney Airport to start recovering from the pandemic in the coming months. It believes this will allow it to pay a 29 cents per share distribution in FY 2021 and then a 37 cents per share distribution in FY 2022. This represents yields of 4.9% and 6.25%, respectively.
Vanguard Australian Shares High Yield ETF (ASX: VHY)
A final option for income investors to consider buying right now is the Vanguard Australian Shares High Yield ETF. I think this exchange traded fund is a quality option for income investors due to the diversity of its holdings. The fund provides investors with exposure to many of the highest yielding shares on the ASX through a single investment. This includes the banks, telcos, and mining giants. At present I estimate that its units offer a forward dividend yield of at least 5%.
And here is another dividend share which looks well-positioned to grow strongly over the next decade and even through the pandemic. This could make it a must buy for income investors..
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More reading
- Fund managers have been buying these ASX shares
- ASX 200 jumped higher, rises more than 2%
- Here’s why these 3 ASX dividend shares are top income choices today
- These ASX 200 share prices were cut in half. Where are they now?
- Leading brokers name 3 ASX 200 shares to buy right now
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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.
The post Why I would buy CBA and these ASX dividend shares appeared first on Motley Fool Australia.
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