Overnight the U.S. Federal Reserve held its monetary policy meeting for June. The central bank kept interest rates on hold at zero and revealed plans for rates to remain at these levels for the next couple of years.
I expect this to be the case in Australia as well and feel it will be many years until interest rates return to “normal” levels again.
In light of this, I continue to believe that ASX dividend shares will be the best way to earn a passive income for the foreseeable future.
But which dividend shares should you buy? Here are three top ASX dividend shares I would buy:
Coles Group Ltd (ASX: COL)
I think that this supermarket operator would be a great dividend share to own. This is due to its defensive qualities and positive long term outlook. I believe this has positioned Coles to deliver solid earnings and dividend growth over the next decade whatever the economy throws at it. At present, I estimate that its shares offer a forward fully franked 3.7% dividend yield.
Dicker Data Ltd (ASX: DDR)
Dicker Data is a wholesale distributor of computer hardware and software. It has consistently grown its earnings and dividends at a solid rate for many years thanks to an increasing number of vendor agreements and solid demand. In FY 2020 the company intends to increase its dividend by 31% to 35.5 cents per share. This represents a 4.5% fully franked dividend yield.
Telstra Corporation Ltd (ASX: TLS)
A final dividend share to consider buying is Telstra. After several tough years, I believe the telco giant’s outlook is the best it has been in a long time. This is because the NBN headwind will soon start to ease and a return to growth should then be possible. Especially given the positive progress it is making with its T22 strategy. In the meantime, I’m confident that its free cash flow can sustain its 16 cents per share fully franked dividend. This represents a very attractive 4.9% 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 Dicker Data Limited and Telstra Limited. 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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