3 high quality dividend shares to buy instead of the big four banks

If you’re looking for a source of income from dividend shares, then I think Commonwealth Bank of Australia (ASX: CBA) is a great option to consider.

I believe it is the highest quality bank on the Australian share market and expect its shares to provide investors with a very generous yield in 2021 (even after factoring in a dividend cut).

However, given that a lot of investors already have meaningful exposure to the banks, it might not be suitable for everyone.

In light of this, I have picked out three ASX dividend shares which I think would be quality alternatives to the banks. They are as follows:

Aventus Group (ASX: AVN)

I think Aventus could be a good dividend option. It is a retail property company specialising in large format retail parks across Australia. Aventus’ rental income has a reasonably high weighting towards everyday needs, with homewares, electrical, furniture, bedding and hardware making up the balance. I think this is a good and robust mix and leaves it well-placed for growth over the coming years. In respect to its distribution, Goldman Sachs recently forecast a ~17.3 cents per unit distribution in FY 2021. This equates to a forward ~7.9% distribution yield.

Dicker Data Ltd (ASX: DDR)

Another dividend share to consider buying instead of the banks is Dicker Data. It is a leading distributor of information technology products. It has delivered consistently solid earnings and dividend growth over the last few years thanks to its strong market position, growing demand, and the addition of new vendors. The good news is that I remain confident that this growth can continue over the coming years. And based on the high levels of insider buying it continues to report, its management team does as well. This year Dicker Data intends to pay a 35.5 cents per share. This represents a fully franked ~5% yield.

Wesfarmers Ltd (ASX: WES)

Lastly, I think this conglomerate is a dividend share to buy. Wesfarmers is the company behind brands such as Bunnings, Kmart, Target, online retailer Catch, and Officeworks. In addition to its retail exposure, the company owns a number of businesses in the chemicals and industrials industries. It also has a hefty cash balance which I suspect could be used to make earnings accretive acquisitions in the near term. Combined, I believe Wesfarmers is well-placed to grow its earnings and dividends at a solid rate over the coming years. At present I estimate that its shares offer a forward fully franked ~3.5% dividend yield.

More reading

• 3 high yield ASX dividend shares for income investors
• ASX 200 jumps 3%: CBA rebounds, Afterpay hits a new record high
• Why I would buy Wesfarmers and these ASX dividend shares
• Can ASX big banks generate an attractive sustainable dividend yield from FY21?
• 2 of the best ASX dividend shares for retirees to buy today

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. The Motley Fool Australia owns shares of Wesfarmers Limited. The Motley Fool Australia has recommended AVENTUS RE UNIT. 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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