If you’re concerned that some popular dividend shares will see their yields fall to zero, then you might want to take a look at the ones listed below.
I believe all three have robust business models that will ensure that they are able to continue paying dividends for a long time to come. Here’s why I like them:
Coles Group Ltd (ASX: COL)
I think Coles is one of the most defensive shares on the Australian share market and well-placed to grow its sales, earnings, and dividend whatever the economy throws at it. And while the same could be said for rival Woolworths Group Ltd (ASX: WOW), I believe Coles is the better value option. At present, I estimate that its shares are trading at ~21x FY 2021 earnings, whereas Woolworths’ shares are trading at almost 26x estimated FY 2021 earnings. Its shares also offer a more generous dividend yield, which I estimate will yield a fully franked 3.9% next year.
Telstra Corporation Ltd (ASX: TLS)
Another top dividend share to consider buying is Telstra. As with Coles, I believe it is a highly defensive share and well-positioned to at least maintain its 16 cents per share dividend over the next couple of years. Especially given its free cash flow forecast, cost cutting plans, and easing NBN headwind. If it does maintain its dividend, its shares will provide investors with a fully franked 5% dividend yield.
Wesfarmers Ltd (ASX: WES)
A final dividend share to consider buying is Wesfarmers. Once again, I think it has attractive and defensive qualities. Especially in the current environment, where the government is supporting home improvements. I expect this to give its Bunnings business a big lift. Which is particularly important, given how the hardware giant is now its biggest contributor to earnings following the spin-off of Coles. At present, I estimate that Wesfarmers’ shares offer investors a forward fully franked ~3.6% dividend yield.
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More reading
- This top fund manager believes dividend yields are going to 0%. Where should you invest?
- Is the Woolworths share price a secret buy?
- Ready to invest $5,000? I’d buy these ASX dividend shares today
- Why I think the Telstra share price could hit $4 in 2020
- Coronavirus second wave potential could drive investment portfolio changes
Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Telstra Limited. 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.
The post 3 robust ASX dividend shares you need to own appeared first on Motley Fool Australia.
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